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1. Company Snapshot

1.a. Company Description

Concentrix Corporation provides technology-infused customer experience (CX) solutions worldwide.The company provides CX process optimization, technology innovation, front- and back-office automation, analytics, and business transformation services.It also offers customer lifecycle management; customer experience/user experience strategy and design; digital transformation; and voice of the customer and analytics solutions.


The company's clients include consumer electronics, technology, e-commerce, and health insurance companies, as well as global IPOs, social brands, and banks.Concentrix Corporation was incorporated in 2009 and is based in Fremont, California.

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1.b. Last Insights on CNXC

Concentrix Corporation's recent performance was negatively impacted by disappointing Q3 earnings, weaker margins, and lowered guidance. The company's goodwill write-downs from the Webhelp acquisition dragged on earnings. Additionally, investors are concerned about slowing growth, with modest revenue growth in Q3. Some institutional investors, such as Yousif Capital Management LLC, have trimmed their holdings, while others, like Ethic Inc. and AlphaQuest LLC, have increased theirs. Concentrix's valuation and profitability have also been questioned by analysts.

1.c. Company Highlights

2. Concentrix Delivers Mixed Q3 Results: Revenue Beats, Margin Pressures Persist

Concentrix reported Q3 revenue of $2.48 billion, a 4% year-on-year increase, exceeding their guidance range. The company's revenue growth was led by banking, financial services, and insurance, with an 8% year-on-year growth. However, non-GAAP operating income was $105 million, below their guidance range, due to excess capacity and accelerated transformation opportunities. Adjusted EBITDA in Q3 was $359 million, with a margin of 14.5%. Non-GAAP diluted earnings per share was $2.78 per share, $0.02 below their guidance range, and slightly below analyst estimates of $2.88.

Publication Date: Oct -26

📋 Highlights
  • Q3 Revenue Growth:: Reported $2.48 billion, up 2.6% YoY (constant currency) and 4% as reported, exceeding guidance.
  • Vertical Performance:: BFSI vertical drove 8% YoY growth, while retail, travel, and e-commerce saw significant sequential growth.
  • Margin Pressures:: Non-GAAP operating income fell to $105 million (below guidance) due to excess capacity and delayed client stability; adjusted EBITDA margin at 14.5% ($359 million).
  • Capital Returns:: Increased quarterly dividend to $0.36/share and spent $42 million repurchasing 800,000 shares, targeting >$240 million in shareholder returns by year-end.
  • Full-Year Guidance Raised:: Revenue now projected at $9.798–$9.823 billion (1.75–2% constant currency growth), with Q4 revenue guidance at $2.525–$2.55 billion.

Segment Performance and Outlook

The company's retail, travel, and e-commerce businesses saw significant sequential growth, driven by broad-based growth across verticals. Concentrix expects margin improvement, driven by technology solutions, new wins, and AI enablement. They had a one-off impact on margins, which they expect to recover from in a couple of quarters. For Q4, Concentrix expects revenue of $2.525 to $2.55 billion, implying constant currency revenue growth of 1.5% to 2.5%.

Valuation and Dividend Strategy

With a P/E Ratio of 9.4 and an EV/EBITDA of 8.86, Concentrix appears to be reasonably valued. The company's dividend yield stands at 2.89%, and they have increased their quarterly dividend to $0.36 per share. Concentrix expects to return over $240 million to shareholders this year, through a combination of share repurchases and dividends. The company's dividend strategy is driven by confidence in generating strong free cash flow, with annual increases a key part of their plan.

Growth Prospects and Risk Management

Analysts estimate next year's revenue growth at 3.2%. Concentrix is investing in transformational items for customers with long-term relationships, expecting long-term benefits and share gains. The company expects to break even on their IX suite of software investments by the end of Q4 and is investing $50 million incrementally in the IX suite. Concentrix prioritizes debt repayment, supporting its dividend and share repurchase program, in 2026.

Capital Allocation and Free Cash Flow

The company generated $179 million in adjusted free cash flow, an increase of about $44 million year-on-year. Concentrix expects to drive free cash flow growth in 2026, driven by decreasing cash interest as they pay down debt, and potential interest rate help. They will prioritize balanced capital allocation, generating more free cash flow to repay debt, support the dividend, and continue share repurchases.

3. NewsRoom

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Concentrix Corporation: Dirt Cheap With Caveats

Dec -02

Source: seekingalpha.com

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Is the Options Market Predicting a Spike in CNXC Stock?

Nov -18

Source: zacks.com

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Concentrix is Named the Highest-Designated Leader in Everest Group's B2B Sales Services PEAK Matrix® Assessment for Second Consecutive Year

Nov -18

Source: globenewswire.com

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Concentrix Corporation (NASDAQ:CNXC) Receives Consensus Recommendation of “Moderate Buy” from Brokerages

Nov -18

Source: defenseworld.net

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Concentrix Stock: Profitable, Undervalued, And Poised To Run?

Nov -12

Source: forbes.com

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AlphaQuest LLC Acquires 994 Shares of Concentrix Corporation $CNXC

Oct -30

Source: defenseworld.net

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Ethic Inc. Has $351,000 Holdings in Concentrix Corporation $CNXC

Oct -30

Source: defenseworld.net

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CorVel (NASDAQ:CRVL) vs. Concentrix (NASDAQ:CNXC) Financial Analysis

Oct -24

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.38%)

6. Segments

Technology and Consumer Electronics

Expected Growth: 12%

Concentrix Corporation's Technology and Consumer Electronics segment growth of 12% is driven by increasing demand for digital transformation, cloud adoption, and IoT integration. Additionally, the rise of e-commerce, social media, and online marketplaces fuels growth in consumer electronics. Furthermore, the need for efficient supply chain management and customer experience enhancement also contributes to this growth.

Retail, Travel and Ecommerce

Expected Growth: 8%

Concentrix Corporation's 8% growth in Retail, Travel, and Ecommerce is driven by increasing online shopping adoption, rising demand for digital customer experience, and growing need for omnichannel support. Additionally, the shift towards cloud-based solutions, investments in AI-powered chatbots, and expansion into new markets also contribute to this growth.

Communications and Media

Expected Growth: 9%

Concentrix Corporation's Communications and Media segment growth of 9% is driven by increasing demand for digital transformation, cloud-based services, and cybersecurity solutions. Additionally, the rise of 5G networks, IoT devices, and streaming services fuels growth in this segment. Furthermore, the company's strategic acquisitions and partnerships have expanded its capabilities, enabling it to capitalize on emerging trends and opportunities.

Banking, Financial Services and Insurance

Expected Growth: 7%

Concentrix Corporation's 7% growth in Banking, Financial Services and Insurance is driven by increasing demand for digital transformation, regulatory compliance, and customer experience enhancement. Additionally, the need for cost reduction, process automation, and risk management are key factors contributing to this growth.

Healthcare

Expected Growth: 11%

Concentrix Corporation's 11% growth in Healthcare is driven by increasing demand for outsourcing services, expansion into new markets, and strategic acquisitions. The company's expertise in claims processing, benefits administration, and patient engagement has enabled it to capitalize on the growing need for cost-effective and efficient healthcare management solutions.

Other

Expected Growth: 6%

Concentrix Corporation's 6% growth is driven by increasing demand for digital transformation services, expansion into high-growth industries, and strategic acquisitions. Additionally, the company's focus on operational efficiency, cost savings, and investments in emerging technologies such as AI and cloud computing are contributing to its growth momentum.

7. Detailed Products

Customer Experience (CX) Solutions

Concentrix provides customer experience solutions that help businesses deliver exceptional customer service through various channels such as voice, email, chat, and social media.

Business Process Outsourcing (BPO) Services

Concentrix offers BPO services that help businesses outsource non-core functions such as finance and accounting, human resources, and procurement.

Digital Transformation Services

Concentrix provides digital transformation services that help businesses adopt digital technologies such as artificial intelligence, blockchain, and cloud computing.

Analytics and Insights

Concentrix offers analytics and insights services that help businesses make data-driven decisions through advanced analytics and reporting.

Automation and Robotics

Concentrix provides automation and robotics services that help businesses automate repetitive tasks and improve efficiency.

Cloud and Infrastructure Services

Concentrix offers cloud and infrastructure services that help businesses migrate to the cloud and manage their infrastructure.

8. Concentrix Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Concentrix Corporation operates in a highly competitive industry, and there are many substitutes available to customers. However, the company's strong brand reputation and customer loyalty programs help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Concentrix Corporation's customers have a high bargaining power due to the availability of substitutes and the company's dependence on a few large clients. This gives customers the power to negotiate prices and terms.

Bargaining Power Of Suppliers

Concentrix Corporation has a diverse supplier base, and no single supplier has a significant impact on the company's operations. This reduces the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants in the industry is moderate, as there are barriers to entry such as high capital requirements and regulatory hurdles. However, the industry is attractive, and new entrants may still pose a threat to Concentrix Corporation.

Intensity Of Rivalry

The industry in which Concentrix Corporation operates is highly competitive, with many players competing for market share. This leads to a high intensity of rivalry, which can affect the company's pricing power and profitability.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 54.40%
Debt Cost 5.29%
Equity Weight 45.60%
Equity Cost 7.05%
WACC 6.09%
Leverage 119.28%

11. Quality Control: Concentrix Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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ExlService

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Value: 2.4

Growth: 7.9

Quality: 7.3

Yield: 0.0

Momentum: 6.5

Volatility: 8.0

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Concentrix

A-Score: 5.0/10

Value: 8.7

Growth: 6.0

Quality: 4.0

Yield: 4.0

Momentum: 4.5

Volatility: 3.0

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Growth: 6.6

Quality: 6.8

Yield: 0.0

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A-Score: 4.3/10

Value: 5.2

Growth: 4.7

Quality: 4.1

Yield: 0.0

Momentum: 7.5

Volatility: 4.3

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N-able

A-Score: 3.7/10

Value: 3.0

Growth: 8.4

Quality: 5.0

Yield: 0.0

Momentum: 0.5

Volatility: 5.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

36.96$

Current Price

36.96$

Potential

-0.00%

Expected Cash-Flows