Concentrix Corp (NASDAQ: CNXC)

Sector: Technology Industry: Information Technology Services CIK: 0001803599
Market Cap 2.79 Bn
P/B 0.64
P/E 8.82
P/S 0.29
ROIC (Qtr) 5.25
Div Yield % 4.05
Rev 1y % (Qtr) 4.01
Total Debt (Qtr) 4.83 Bn
Debt/Equity (Qtr) 1.11

About

Concentrix Corporation, a leading global provider of Customer Experience (CX) solutions and technology, operates in the CX industry which has become a strategic imperative for all enterprises today. The company's main business activities involve providing end-to-end capabilities, including CX process optimization, technology innovation, front- and back-office automation, analytics, and business transformation services to clients in five primary industry verticals. Concentrix's business model is centered around enabling companies to deliver exceptional...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 350.26M provide 9.34x coverage of short-term debt 37.50M, demonstrating strong liquidity position and minimal refinancing risk.
  • Robust free cash flow of 515.81M exceeds capital expenditure of 231.34M by 2.23x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 5.14B provides 4.55x coverage of working capital 1.13B, indicating strong operational backing.
  • Operating cash flow of 747.15M provides strong 3.23x coverage of capital expenditure 231.34M, enabling organic growth.
  • Cash position of 350.26M fully covers payables of 221.57M by 1.58x, showing strong vendor relationship management.

Bear case

  • Operating cash flow of 747.15M barely covers its investment activities of (233M), with a coverage ratio of -3.21, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 747.15M provides thin coverage of dividend payments of (89.03M) with a -8.39 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 350.26M provide limited coverage of acquisition spending of (1.66M), which is -210.62x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 673.39M show weak coverage of depreciation charges of 663.30M, with a 1.02 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 515.81M represents just -3.30x of debt issuance (156.28M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

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 0.59 1.44
EV to Cash from Ops. EV/CFO 9.82 5.63
EV to Debt EV to Debt 1.52 8.06
EV to EBIT EV/EBIT 10.90 -4.05
EV to EBITDA EV/EBITDA 5.77 -0.52
EV to Free Cash Flow [EV/FCF] EV/FCF 14.22 -1.66
EV to Market Cap EV to Market Cap 2.63 1.35
EV to Revenue EV/Rev 0.75 57.14
Price to Book Value [P/B] P/B 0.64 3.34
Price to Earnings [P/E] P/E 8.82 -5.47
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.55 -0.83
Dividend Payout Ratio % Div Payout % (Qtr) 28.00 0.66
Dividend per Basic Share Div per Share (Qtr) 1.33 0.47
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 16.09 6.24
Interest Coverage Int. cover (Qtr) 2.27 -319.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 5.08 -253.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 42.24 114.15
Dividend Growth (1y) % Div 1y % (Qtr) 10.32 35.23
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 25.20 -22.49
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -3.99 -25.03
EBIT Growth (1y) % EBIT 1y % (Qtr) 16.16 -82.44
EBT Growth (1y) % EBT 1y % (Qtr) 43.03 97.07
EPS Growth (1y) % EPS 1y % (Qtr) 57.14 147.29
FCF Growth (1y) % FCF 1y % (Qtr) 39.92 -8,638.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 0.84 -8.24
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.78 0.78
Cash Payout Ratio Cash Payout (Qtr) 0.09 0.01
Cash Ratio Cash Ratio (Qtr) 0.17 0.66
Current Ratio Curr Ratio (Qtr) 1.56 2.12
Debt to Equity Ratio Debt/Equity (Qtr) 1.11 0.88
Interest Cover Ratio Int Coverage (Qtr) 2.27 -319.17
Times Interest Earned Times Interest Earned (Qtr) 2.27 -319.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 13.80 -550.76
EBIT Margin % EBIT Margin % (Qtr) 6.93 -775.74
EBT Margin % EBT Margin % (Qtr) 3.88 -827.89
Gross Margin % Gross Margin % (Qtr) 35.30 24.07
Net Profit Margin % Net Margin % (Qtr) 3.30 -830.34