CNXC - Concentrix: Worth A Look

2024-06-04 13:10:43 ET

Summary

• Concentrix Corporation's stock has declined by 40% since becoming an independent public entity.
• The merger with Webhelp will boost Concentrix's competitive profile and increase its exposure to the EMEA region.
• Despite its strong forward earnings growth profile (triple-digit growth in FY24, followed by double-digit growth through FY26), CNXC can be picked up at a forward P/E of less than 5x.
• Despite an adverse Q1, mainly due to one-off and seasonal issues, FCF generation will pick up meaningfully over the next 3 quarters and help the company deleverage to 2.5x net leverage.
• The charts are showing signs of bottoming out, and could receive additional support from an expected ramp-up in the buyback run rate.

Introduction

The stock of Concentrix Corporation ( CNXC ), a facilitator of CX solutions (Customer Experience) and technology for enterprises across the world (over 2000 clients), hasn’t been a very rewarding proposition for its stakeholders since it got spun off from Synnex (which consequently ended up merging with Tech Data to become TD Synnex). Since trading as an independent public entity, the CNXC stock has eroded investor wealth to the tune of 40%, even as the Nasdaq has expanded by 53% during the same period. It appears that a large part of the weakness has taken place this year alone, with the stock down by 37% in 2024 alone!...

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