TELUS International (CDA) (TIXT) AI Stock Analysis

• Market Cap: C$1.55B
• Dividend Yield: N/A
• Average Volume (3M): 213.84K
• Price to Earnings (P/E): 36.0
• Beta (1Y): 1.76
• Revenue Growth: 2.87%
• EPS Growth: -271.63%
• Country: CA
• Employees: 78,879
• Sector: Technology
• Sector Strength: 91
• Industry: Software - Infrastructure
• EPS (TTM): 0.08
• Shares Outstanding: 111,490,166
• 10 Day Avg. Volume: 151,909
• 30 Day Avg. Volume: 213,842
• PEG Ratio: 0.07
• Price to Book (P/B): 0.53
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 3.18
• Enterprise Value/Market Cap: 1.54
• Enterprise Value/Revenue: 0.22
• Enterprise Value/Gross Profit: 1.46
• Enterprise Value/Ebitda: 1.30
• 1Y Price Target: C$5.45
• Price Target Upside: -3.02% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 9

• Rating: 67 Neutral
• Price Target: C$6.00 ▲(6.76%Upside)

TELUS International's stock is bolstered by strong cash flow and solid technical indicators, suggesting potential for future gains. However, challenges in profitability, valuation concerns due to a negative P/E ratio, and financial pressures highlighted in the earnings call temper the overall score.

Positive Factors

Acquisition Proposal

TIXT received a non-binding indication of interest from parent company TELUS at $3.40 per share for the remaining shares of TIXT not already owned by the parent.

Premium Offer

The offer represents a 15% premium to the closing price and a 23% premium to the stock's trailing 30-day volume weighted average price.

Negative Factors

Client Concentration

TIXT lacks near-term catalysts as the company's revenue growth and profits are under meaningful pressure from client concentration and a weaker IT services demand environment.

Competitive Pressures

The macroeconomic backdrop has pressured growth prospects in the near term, and Telus Digital’s margins will remain under pressure due to challenges with the recent cost optimization initiatives and pricing pressure from competitive forces.

TELUS International (CDA) Business Overview & Revenue Model

Company Description

TELUS International (Cda) Inc. provides customer experience and digital business services in Europe, North America, the Asia-Pacific, and the Central America. It offers digital experience solutions, such as AI and bots, omnichannel CX, mobility solutions, cloud contact center, big data, platform transformation, and UX/UI design; and customer experience solutions, including work anywhere/work from home, customer care, technical support, sales growth and retention, and healthcare/patient experience. The company also provides IT lifecycle services comprising cloud and platform services, app dev and management, quality assurance and testing, system operations, IT service desk, internet of things, engineering solutions, and enterprise platform services; advisory services consisting of digital strategy, CX process consulting, data and customer analytics, workforce management, learning excellence solutions, and business and process transformation; robotic process automation, talent acquisition, finance and accounting, and supply chain management; and content moderation and social media, and fraud prevention and detection. It serves tech and games, communications and media, ecommerce and fintech, healthcare, and travel and hospitality industries. The company was founded in 2005 and is headquartered in Vancouver, Canada. TELUS International (Cda) Inc. is a subsidiary of TELUS Communications Inc.

How the Company Makes Money

TELUS International generates revenue primarily through its comprehensive suite of digital solutions and services tailored to meet the needs of various industries. The company's key revenue streams include digital customer experience management services, IT services, and consulting. Significant revenue is derived from long-term contracts with large enterprises in sectors such as technology, telecommunications, and healthcare. TELUS International also benefits from strategic partnerships and alliances that enhance its service offerings and expand its market reach. By leveraging its expertise in AI and machine learning, the company provides innovative solutions that help clients improve efficiency and customer satisfaction, thus driving revenue growth.

TELUS International (CDA) Financial Statement Overview

Summary

TELUS International's financial performance is characterized by strong cash generation and a stable equity base. However, the company's financial health is undermined by inconsistent revenue growth, ongoing net losses, and rising leverage, presenting a moderate risk level.

Income Statement

The income statement reflects a challenging period for TELUS International. The gross profit margin in the TTM is approximately 61.35%, indicating efficient cost management. However, the company is struggling to maintain profitability with a net loss, resulting in a negative net profit margin of -4.27%. Revenue growth has been inconsistent, with a slight decline in recent periods. The EBIT and EBITDA margins have also contracted, reflecting operational inefficiencies.

Balance Sheet

TELUS International's balance sheet shows moderate financial stability. The debt-to-equity ratio stands at 0.76, suggesting a manageable leverage level, though it has been increasing over time. Return on equity is negative due to net losses, but the equity ratio is a solid 43.27%, indicating a strong asset base relative to liabilities.

Cash Flow

The cash flow statement highlights strong cash generation capabilities, with a positive operating cash flow to net income ratio. Despite a decrease in free cash flow growth, the company maintains a healthy free cash flow to net income ratio, underscoring its ability to generate cash despite net losses.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.67B	2.66B	2.71B	2.47B	2.19B	1.58B
Gross Profit	1.64B	2.15B	2.25B	2.00B	1.76B	1.28B
EBITDA	356.00M	437.00M	523.43M	527.25M	439.10M	396.92M
Net Income	-114.00M	-61.00M	54.00M	183.00M	78.00M	103.00M
Balance Sheet
Total Assets	4.51B	4.52B	4.82B	3.56B	3.63B	3.74B
Cash, Cash Equivalents and Short-Term Investments	137.00M	174.00M	131.00M	125.00M	115.00M	152.50M
Total Debt	1.49B	1.52B	1.75B	964.00M	1.15B	1.77B
Total Liabilities	2.56B	2.58B	2.79B	1.72B	1.97B	2.63B
Stockholders Equity	1.95B	1.95B	2.04B	1.84B	1.66B	1.11B
Cash Flow
Free Cash Flow	325.07M	412.00M	409.00M	332.00M	183.00M	237.00M
Operating Cash Flow	436.02M	517.00M	498.00M	437.00M	282.00M	297.00M
Investing Cash Flow	-109.00M	-107.00M	-941.00M	-119.00M	-110.00M	-1.87B
Financing Cash Flow	-343.83M	-361.00M	443.00M	-300.00M	-206.00M	1.66B

TELUS International (CDA) Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5.62
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TIXT, the sentiment is Positive. The current price of 5.62 is above the 20-day moving average (MA) of 5.24, above the 50-day MA of 4.65, and above the 200-day MA of 4.72, indicating a bullish trend. The MACD of 0.22 indicates Positive momentum. The RSI at 66.26 is Neutral, neither overbought nor oversold. The STOCH value of 79.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:TIXT.

TELUS International (CDA) Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TIXT	67 Neutral	C$1.55B	35.99	-5.70%	―	2.87%	-271.63%
CVO	67 Neutral	C$830.27M	―	-9.00%	―	9.08%	37.74%
Sector *	63 Neutral	$34.78B	5.17	-11.38%	1.67%	5.54%	-17.15%
BB	―	$2.33B	―	-1.76%	―	―	―
NOW	64 Neutral	C$54.89M	13.90	679.89%	―	-10.35%	―
STC	60 Neutral	C$263.02M	―	-2.67%	―	-1.72%	76.81%
DND	49 Neutral	C$592.03M	―	-39.72%	0.85%	2.47%	19.37%

TELUS International (CDA) Corporate Events

TELUS Digital Forms Special Committee to Review Acquisition Proposal

TELUS Digital has formed a special committee to evaluate an unsolicited non-binding proposal from TELUS Corporation to acquire all outstanding shares of TELUS Digital. The committee, composed of independent directors, has engaged legal and financial advisors to ensure a thorough review process. The company emphasizes transparency and is committed to acting in the best interests of all stakeholders, though no decisions have been made regarding the proposal.

The most recent analyst rating on (TSE:TIXT) stock is a Hold with a C$3.40 price target. To see the full list of analyst forecasts on TELUS International (CDA) stock, see the TSE:TIXT Stock Forecast page.

TELUS Digital Receives Acquisition Proposal from TELUS Corporation

TELUS Digital has received a non-binding proposal from TELUS Corporation to acquire all outstanding shares not already owned by the corporation for US$3.40 per share. The proposal is contingent upon several conditions, including due diligence and shareholder approval. TELUS Digital’s board plans to form a special committee to review the proposal, but no decisions have been made yet, and shareholders are advised that no action is required at this time.

The most recent analyst rating on (TSE:TIXT) stock is a Hold with a C$7.00 price target. To see the full list of analyst forecasts on TELUS International (CDA) stock, see the TSE:TIXT Stock Forecast page.