CONDUENT Inc (NASDAQ: CNDT)

Sector: Technology Industry: Information Technology Services CIK: 0001677703
Market Cap 316.42 Mn
P/B 0.44
P/E -2.12
P/S 0.10
ROIC (Qtr) -12.62
Div Yield % 0.00
Rev 1y % (Qtr) -4.96
Total Debt (Qtr) 830.00 Mn
Debt/Equity (Qtr) 1.16

About

Conduent Inc., a leading provider of digital business solutions and services, operates under the ticker symbol CNDT. The company's operations span across commercial, government, and transportation sectors, with a primary focus on delivering valuable outcomes for its clients and the millions of people who rely on them. Conduent's main business activities revolve around providing business process services and customized solutions. These services cater to various industries and are primarily divided into three reportable segments: Commercial, Government,...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 248M provide 15.50x coverage of short-term debt 16M, demonstrating strong liquidity position and minimal refinancing risk.
  • Tangible assets of 1.87B provide exceptional 22.83x coverage of deferred revenue 82M, showing strong service capability backing.
  • Robust tangible asset base of 1.87B provides 4.14x coverage of working capital 452M, indicating strong operational backing.
  • Cash reserves of 248M provide ample 3.06x coverage of acquisition spending 81M, enabling strategic growth opportunities.
  • Cash reserves of 248M provide solid 5.77x coverage of other non-current liabilities 43M, indicating strong liquidity.

Bear case

  • Operating cash flow of (71M) barely covers its investment activities of 28M, with a coverage ratio of -2.54, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of (71M) provides insufficient coverage of deferred revenue obligations of 82M, which is -0.87x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of (71M) shows concerning coverage of stock compensation expenses of 18M, with a -3.94 ratio indicating potential earnings quality issues.
  • Free cash flow of (124M) provides weak coverage of capital expenditures of 53M, with a -2.34 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (165M) show weak coverage of depreciation charges of 191M, with a -0.86 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Information Technology Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 IBM International Business Machines Corp 279.99 Bn 35.41 4.28 66.57 Bn
2 ACN Accenture plc 168.17 Bn 22.09 2.38 8.20 Bn
3 INFY Infosys Ltd 74.96 Bn 23.74 3.89 -
4 CTSH Cognizant Technology Solutions Corp 41.45 Bn 19.48 1.99 1.17 Bn
5 FIS Fidelity National Information Services, Inc. 35.21 Bn 231.62 3.36 13.00 Bn
6 WIT Wipro Ltd 29.93 Bn 19.70 2.97 1.95 Bn
7 BR Broadridge Financial Solutions, Inc. 26.38 Bn 28.51 3.74 3.28 Bn
8 LDOS Leidos Holdings, Inc. 23.72 Bn 16.88 1.37 5.23 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.33 1.44
EV to Cash from Ops. EV/CFO -11.61 5.63
EV to Debt EV to Debt 0.99 8.06
EV to EBIT EV/EBIT -5.00 -4.05
EV to EBITDA EV/EBITDA 28.43 -0.52
EV to Free Cash Flow [EV/FCF] EV/FCF -6.65 -1.66
EV to Market Cap EV to Market Cap 2.61 1.35
EV to Revenue EV/Rev 0.27 57.14
Price to Book Value [P/B] P/B 0.44 3.34
Price to Earnings [P/E] P/E -2.12 -5.47
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -0.83
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 0.66
Dividend per Basic Share Div per Share (Qtr) 0.00 0.47
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 6.24
Interest Coverage Int. cover (Qtr) -3.37 -319.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 41.76 -253.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -36.90 114.15
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 35.23
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -122.38 -22.49
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -96.78 -25.03
EBIT Growth (1y) % EBIT 1y % (Qtr) -124.52 -82.44
EBT Growth (1y) % EBT 1y % (Qtr) -136.77 97.07
EPS Growth (1y) % EPS 1y % (Qtr) -138.36 147.29
FCF Growth (1y) % FCF 1y % (Qtr) -106.67 -8,638.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -22.40 -8.24
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.23 0.78
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.35 0.66
Current Ratio Curr Ratio (Qtr) 1.64 2.12
Debt to Equity Ratio Debt/Equity (Qtr) 1.16 0.88
Interest Cover Ratio Int Coverage (Qtr) -3.37 -319.17
Times Interest Earned Times Interest Earned (Qtr) -3.37 -319.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 0.80 -550.76
EBIT Margin % EBIT Margin % (Qtr) -5.37 -775.74
EBT Margin % EBT Margin % (Qtr) -6.97 -827.89
Gross Margin % Gross Margin % (Qtr) 17.70 24.07
Net Profit Margin % Net Margin % (Qtr) -4.90 -830.34