Concentrix (CNXC) AI Stock Analysis

• Market Cap: $2.85B
• Dividend Yield: 2.87%
• Average Volume (3M): 693.14K
• Price to Earnings (P/E): 11.9
• Beta (1Y): 1.09
• Revenue Growth: 35.20%
• EPS Growth: -35.86%
• Country: US
• Employees: 450,000
• Sector: Technology
• Sector Strength: 54
• Industry: Software
• EPS (TTM): 3.71
• Shares Outstanding: 64,337,845
• 10 Day Avg. Volume: 733,731
• 30 Day Avg. Volume: 693,144
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.30
• Price to Cash Flow (P/CF): 2.50
• P/FCF Ratio: 2.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $67.67
• Price Target Upside: 52.82% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

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 Business Overview & Revenue Model

Company Description

Concentrix 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 Money

Concentrix 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

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

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

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 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
9.62B	7.11B	6.32B	5.59B	4.72B
	Gross Profit
3.45B	2.58B	2.26B	1.97B	1.66B
	EBIT
596.39M	661.33M	365.54M	301.57M	39.64M
	EBITDA
596.39M	971.97M	981.09M	831.92M	579.22M
	Net Income Common Stockholders
251.22M	313.84M	435.05M	405.58M	164.81M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
240.57M	295.34M	145.38M	182.04M	152.66M
	Total Assets
11.99B	12.49B	6.67B	5.05B	5.18B
	Total Debt
4.74B	4.94B	2.22B	802.02M	1.15B
	Net Debt
4.50B	4.65B	2.08B	619.98M	992.46M
	Total Liabilities
7.95B	8.35B	3.97B	2.43B	2.88B
	Stockholders Equity
4.04B	4.14B	2.70B	2.62B	2.30B
Cash Flow		Free Cash Flow
428.73M	497.48M	460.70M	365.10M	336.28M
	Operating Cash Flow
667.49M	678.01M	600.72M	514.18M	507.61M
	Investing Cash Flow
-244.27M	-2.11B	-1.84B	-78.65M	-109.22M
	Financing Cash Flow
-492.53M	1.80B	1.24B	-401.87M	-335.22M

Concentrix Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 44.28
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: 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 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
G	80 Outperform	$8.63B	17.25	22.15%	1.24%	6.46%	-16.94%
EXLS	79 Outperform	$7.48B	38.06	21.80%	―	12.74%	9.92%
CXM	75 Outperform	$2.06B	59.85	18.83%	―	12.02%	50.09%
CNXC	71 Outperform	$2.85B	11.92	5.89%	2.87%	35.20%	-35.86%
TASK	58 Neutral	$1.18B	26.58	9.78%	―	7.64%	5.22%
Sector *	58 Neutral	$21.67B	10.04	-18.58%	2.39%	5.01%	-23.17%
TTEC	45 Neutral	$161.42M	―	-75.62%	17.16%	-10.32%	-3860.81%

Concentrix Corporate Events

Concentrix Holds Special Meeting to Amend Charter

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.