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Concentrix Corporation (CNXC)
:CNXC
US Market

Concentrix (CNXC) AI Stock Analysis

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Concentrix

(NASDAQ:CNXC)

71Outperform
Concentrix's overall score reflects strong financial fundamentals, including healthy revenue growth and solid cash flow, tempered by declining profit margins. Technical indicators suggest bearish momentum, while valuation factors highlight potential undervaluation. The earnings call presented a mixed outlook with strategic focus on AI and client retention, offset by low growth guidance. These factors combine to yield a moderate overall score, indicating a stable but cautiously optimistic outlook.
Positive Factors
Revenue Growth
CNXC grew revenues 2.7% year-over-year on a pro-forma constant currency basis, outperforming what management believes was a flat BPO market.
Technology and Innovation
CNXC has seen some good initial response to its Gen AI iX product suite and management feels it has accomplished its goal of getting the products commercialized and scalable.
Negative Factors
Leverage and Financial Risk
Investor concerns are understandable as leverage is high and impacts from GenAI are unknown.

Concentrix (CNXC) vs. S&P 500 (SPY)

Concentrix Business Overview & Revenue Model

Company DescriptionConcentrix Corp is a technology-enabled company specialized in customer engagement and customer management. The company provides end-to-end solutions that facilitate communication between clients and their customers, provide analytics and process optimization, and support client-centric operations and back-office processing across the enterprise. The solutions are provided in four complementary areas: Customer Lifecycle Management; CX/UX Strategy and Design; Digital Transformation; and VOC and Analytics. Also, the company provides insurance solutions, marketing solutions, and automation solutions.
How the Company Makes MoneyConcentrix makes money primarily through providing outsourced customer experience solutions and business process outsourcing (BPO) services. The company's revenue model is based on long-term contracts with clients who pay for its services, which include customer support, technical support, sales, and back-office processing. Revenue is generated through a combination of fixed-rate contracts, where clients pay a predetermined fee, and variable-rate contracts, where earnings are tied to specific performance metrics or outcomes. Concentrix benefits from economies of scale and a diverse client base across various industries, which helps stabilize its revenue streams. Additionally, the company has strategic partnerships with leading technology providers that enhance its service offerings and contribute to its financial performance.

Concentrix Financial Statement Overview

Summary
Concentrix demonstrates substantial revenue growth and solid cash flow generation, supported by a healthy balance sheet with low leverage. However, declining profitability margins and a decrease in free cash flow present challenges. The company's financial health is stable, but attention to improving profit margins and cash flow efficiency will be crucial for enhancing financial performance.
Income Statement
75
Positive
Concentrix shows a strong revenue growth trajectory with a 35.2% increase from 2023 to 2024. The gross profit margin for 2024 is 35.9%, indicating efficient cost management. However, the net profit margin decreased to 2.6% from 4.4% in 2023, suggesting rising expenses or other operational challenges. The EBIT and EBITDA margins are stable at around 6.2% for EBIT, but EBITDA margin dropped significantly from 13.7% in 2023 to 6.2% in 2024, indicating potential increased operational or restructuring costs.
Balance Sheet
82
Very Positive
The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.0006, showcasing minimal leverage and strong equity position. Return on Equity (ROE) is modest at 6.2%, slightly down from 7.6% in 2023, indicating stable but not high profitability relative to equity. The equity ratio improves to 33.7%, reflecting a solid asset base funded by equity rather than debt.
Cash Flow
70
Positive
Operating cash flow remains solid at $667 million, but free cash flow decreased by 13.8% compared to 2023. The operating cash flow to net income ratio is strong at 2.66, indicating robust cash generation relative to reported earnings, while free cash flow to net income ratio stands at 1.71, showing effective cash management despite the decrease.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
9.62B7.11B6.32B5.59B4.72B
Gross Profit
3.45B2.58B2.26B1.97B1.66B
EBIT
596.39M661.33M365.54M301.57M39.64M
EBITDA
596.39M971.97M981.09M831.92M579.22M
Net Income Common Stockholders
251.22M313.84M435.05M405.58M164.81M
Balance SheetCash, Cash Equivalents and Short-Term Investments
240.57M295.34M145.38M182.04M152.66M
Total Assets
11.99B12.49B6.67B5.05B5.18B
Total Debt
4.74B4.94B2.22B802.02M1.15B
Net Debt
4.50B4.65B2.08B619.98M992.46M
Total Liabilities
7.95B8.35B3.97B2.43B2.88B
Stockholders Equity
4.04B4.14B2.70B2.62B2.30B
Cash FlowFree Cash Flow
428.73M497.48M460.70M365.10M336.28M
Operating Cash Flow
667.49M678.01M600.72M514.18M507.61M
Investing Cash Flow
-244.27M-2.11B-1.84B-78.65M-109.22M
Financing Cash Flow
-492.53M1.80B1.24B-401.87M-335.22M

Concentrix Technical Analysis

Technical Analysis Sentiment
Negative
Last Price44.28
Price Trends
50DMA
47.30
Negative
100DMA
45.10
Negative
200DMA
53.76
Negative
Market Momentum
MACD
-0.85
Positive
RSI
39.66
Neutral
STOCH
40.14
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNXC, the sentiment is Negative. The current price of 44.28 is below the 20-day moving average (MA) of 45.65, below the 50-day MA of 47.30, and below the 200-day MA of 53.76, indicating a bearish trend. The MACD of -0.85 indicates Positive momentum. The RSI at 39.66 is Neutral, neither overbought nor oversold. The STOCH value of 40.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CNXC.

Concentrix Risk Analysis

Concentrix disclosed 27 risk factors in its most recent earnings report. Concentrix reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Concentrix Peers Comparison

Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
GG
80
Outperform
$8.63B17.2522.15%1.24%6.46%-16.94%
79
Outperform
$7.48B38.0621.80%12.74%9.92%
CXCXM
75
Outperform
$2.06B59.8518.83%12.02%50.09%
71
Outperform
$2.85B11.925.89%2.87%35.20%-35.86%
58
Neutral
$1.18B26.589.78%7.64%5.22%
58
Neutral
$21.67B10.04-18.58%2.39%5.01%-23.17%
45
Neutral
$161.42M-75.62%17.16%-10.32%-3860.81%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CNXC
Concentrix
43.32
-17.66
-28.96%
EXLS
Exlservice Holdings
45.41
14.68
47.77%
G
Genpact
49.35
16.47
50.09%
TTEC
TTEC Holdings
3.12
-7.22
-69.83%
TASK
TaskUs
13.22
1.15
9.53%
CXM
Sprinklr
9.20
-4.33
-32.00%

Concentrix Earnings Call Summary

Earnings Call Date: Jan 15, 2025 | % Change Since: -6.13% | Next Earnings Date: Mar 26, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted Concentrix's strong client retention, successful integration of Webhelp, and robust free cash flow, positioning the company well for future growth. However, challenges remain with low growth guidance and decreased revenue in certain verticals.
Highlights
High Client Retention and New Solutions Revenue
Concentrix maintained a high client revenue retention rate of approximately 99% in fiscal 2024. Nearly $1 billion of revenue in 2024 came from new solutions that didn't exist at scale two years ago, such as data annotation, AI design, and cybersecurity.
Completion of Webhelp Integration
The integration of Webhelp was completed ahead of schedule, with ongoing synergy benefits expected in 2025 and beyond.
Strong Free Cash Flow and Debt Reduction
Adjusted free cash flow was $475 million for the year. The company reduced net debt by approximately $209 million during the year.
Positive Revenue Growth in Key Verticals
Revenue from retail, travel, and e-commerce clients grew almost 9% year-over-year, and revenue from banking, financial services, and insurance clients grew 5%.
Robust Pipeline and Future Growth Plans
The company secured key transformative wins and expects to grow revenue, non-GAAP operating margin, and free cash flow in 2025.
Lowlights
Decreased Revenue in Some Verticals
Revenue from communications and media clients decreased by 1%, as did revenue from technology and consumer electronics clients, and health care verticals.
Lower Q4 Operating Margin
Non-GAAP operating income margin was 14.2%, a decrease from Q4 2023, due to increased technology spend and costs related to shore shift.
Low Growth Guidance for 2025
The company provided guidance for 2025 with constant currency revenue growth in the range of 0% to 1.5%, indicating a challenging growth environment.
Company Guidance
During Concentrix's Q4 2024 earnings call, the company provided guidance that includes several key metrics and expectations for 2025. The company anticipates full-year reported revenue to be between $9.47 billion and $9.61 billion, implying constant currency revenue growth of 0% to 1.5%. Non-GAAP operating income is expected to be in the range of $1.3 billion to $1.34 billion, with non-GAAP EPS projected between $11.18 and $11.77 per share. The effective tax rate is expected to be approximately 25.5% to 26.5%. The guidance acknowledges a 150 basis point negative impact from foreign exchange rates. Concentrix also highlighted plans to increase adjusted free cash flow to between $625 million and $650 million and emphasized a continued focus on reducing low complexity transactions, which have decreased from 13% to 7% over three years. The company expects continued growth in outsourcing and technology-led solutions, with plans to leverage generative AI to enhance client offerings.

Concentrix Corporate Events

Shareholder MeetingsBusiness Operations and Strategy
Concentrix Holds Special Meeting to Amend Charter
Neutral
Oct 29, 2024

At a Special Meeting on October 28, 2024, the Company received stockholder approval to amend its Charter, removing the supermajority voting requirement for certain changes. Additionally, the 2020 Plan was revised to increase authorized shares by 3 million and remove the evergreen provision. The meeting also approved potential adjournment to gather more proxies if needed, reflecting active shareholder engagement in shaping company governance.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.