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Company Overview: Concentrix Corporation (NASDAQ: CNXC) is a global provider of customer experience (CX) solutions blended with technology. Clients can benefit from the company's end-to-end services, including CX process optimization, technological innovation, front- and back-office automation, analytics, and business transformation. It provides integrated solutions that support the customer lifecycle, including customer experience (CX) and user experience (UX) strategy and design and analytics and actionable insights. Customer care, sales support, digital marketing, technical assistance, digital self-service, content moderation, creative design and content development, and back-office services are among its Customer Lifecycle Management solutions. The company's CX/UX Strategy and Design services include CX strategy, data-driven user design, journey mapping, and multi-platform engineering. Robotic Process Automation (RPA) and cognitive automation are among the services offered by its Digital Transformation solutions.
CNXC Details
Key Takeaways from Q1FY22 (ended February 28, 2022)
Revenues & Operating Profit Key Highlights; Analysis by Kalkine Group
Recent Developments
Balance Sheet & Liquidity Position
Key Metrics: In Q1FY22, CNXC's operating and net margins were 9.6% and 7.2%, compared to the industry median of 10.0% and 6.6%, respectively. ROE stood at 4.1%, 290 bps more than the industry median.
Profitability Metrics; Analysis by Kalkine Group
Top 10 Shareholders: The top 10 shareholders together form around 65.46% of the total shareholding, while the top 4 constitute the maximum holding. Mitac International Corp and Fidelity Management & Research Company LLC hold the maximum stake in the company at 16.63% and 10.81%, respectively, as also highlighted in the chart below:
Top 10 Shareholders; Analysis by Kalkine Group
Risk Analysis
Outlook
Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: Over the past one month, CNXC's share price has corrected 19.32%. The stock is currently leaning towards the lower end of its 52-week range of USD 141.38 to USD 208.48. We have valued the stock using the Price/Earnings multiple-based illustrative relative valuation method and arrived at a target price with an upside of mid-twenties (in percentage terms). We believe that the company is trading at premium with its peer's average, considering its recent acquisition and solid volumes. We have taken peers like Western Union Co (NYSE: WU) and StarTek, Inc. (NYSE: SRT). Considering the decent topline performance, growth in net margin, positive outlook, associated risks, and current valuation, we give a "Buy" recommendation on the stock at the closing market price of USD 157.65, up 4.47% as of April 25, 2022.
CNXC Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.
Note 3: The report publishing date is as per the Pacific Time Zone.
Technical Indicators Defined
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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