CVG  Convergys Corporation

Exchange

NYSE

Sector

Technology

Industry

EDP Services

Market Cap.

2.34B

Vuru Grade

55.81/100

Current Price

$24.54
+0.22 (+0.90%)

Growth Price

$23.55
Fairly valued

Stability Price

$39.20
Undervalued by 59.72%

Company Metrics

  • P/E 15.27
  • P/S 0.8
  • P/B 1.73
  • EPS 1.61
  • Cash ROIC 7.65%
  • Cash Ratio 0.64
  • Dividend 0.36 / 1.48%
  • Avg. Vol. 698,756.00
  • Shares 95.35M
  • Market Cap. 2.34B

Company Description

Convergys Corporation provides relationship management solutions worldwide. The company's Customer Management segment provides agent-assisted services, including customer acquisition, customer retention, technical support, back office, and business-to-business services. This segment also offers intelligent interaction solutions comprising technologies, such as voice portals and speech automation, ... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Convergys Corporation (CVG) Moves Higher on Volume Spike for February 16
Equities.com - Feb 16, 2017
Convergys Corporation (CVG) traded on unusually high volume on Feb. 16, as the stock gained 1.08% to close at $24.32. On the day, Convergys Corporation saw 1.43 million shares trade hands on 10,103 trades. Considering that the stock averages only a ...
Dividend Growth of Convergys Corporation(CVG) - Highland Mirror
The Bank of Montreal Can Has $7112000 Position in Convergys Corp. (CVG) - DailyQuint
Cincinnati company to lay off 175 in Hazelwood
St. Louis Business Journal - Feb 10, 2017
Convergys Corp. (NYSE: CVG), a Cincinnati-based billing and customer service provider, plans to close one of its client programs in Hazelwood and lay off up to 175 employees, effective April 28.
Convergys laying off 175 employees in Hazelwood - STLtoday.com
News Convergys Corp.CVG
Wall Street Journal - Feb 11, 2011
News Convergys Corp.CVG. Significant News Only. 12/27/16; Press Release. Research Reports Coverage on Business Services Stocks -- Interpace Diagnostics, Convergys, HMS Holdings, and Acacia Research.
Convergys Corporation (CVG) Ex-Dividend Date Scheduled for December 21, 2016
Nasdaq - Nov 14, 2016
Convergys Corporation ( CVG ) will begin trading ex-dividend on December 21, 2016. A cash dividend payment of $0.09 per share is scheduled to be paid on January 06, 2017.
Convergys Corp (CVG) is Downgraded by SunTrust to ” Hold”
Highland Mirror - Feb 15, 2017
Convergys Corp (CVG) was Downgraded by SunTrust to ” Hold”. Earlier the firm had a rating of “Buy ” on the company shares.
Convergys Corporation (CVG) Upgraded at Zacks Investment Research - The Cerbat Gem
Convergys (CVG) Q3 2016 Results - Earnings Call Transcript
Seeking Alpha - Nov 9, 2016
Welcome to the Convergys Third Quarter 2016 Earnings Teleconference. Your lines have been placed on listen-only until the question-and-answer session.
Convergys to Acquire buw
Business Wire (press release) - Jul 6, 2016
CINCINNATI--(BUSINESS WIRE)--Convergys Corporation (NYSE: CVG), a global leader in customer management, today announced a definitive agreement under which Convergys will acquire Germany-based buw for EUR 123 million in cash, subject to ...
Convergys Corp. to lay off 375 call center employees this fall
Tampabay.com - Jul 26, 2016
Convergys has about 1,000 employees in Tampa, said spokeswoman Brooke Beiting. The layoff is "a result of (a) client's evolving business needs," she said.
Customer management firm plans layoffs at Tampa call center - Tampa Bay Business Journal
BRIEF-Convergys Corp entered into credit agreement with lenders identified ...
Reuters - Jan 13, 2017
Jan 28 Puerto Rico's federal oversight board announced at a public meeting on Saturday that it has selected Citigroup Global Markets as its financial adviser, and Ramon Ruiz-Comas as interim executive director.
Cincinnati firm signs on with United Nations
Cincinnati Business Courier - Oct 5, 2016
“As an organization with a worldwide presence, we have a unique vantage point and see first-hand how lack of educational and employment opportunities contribute to inequality,” Convergys CEO Andrea Ayers said in a statement. “We believe that, as a ...
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for CVG to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate CVG's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$24.54 Current Price

$23.55 Growth Price (DCF)

Fairly valued


Growth Rate Assumed by Market: 4.30%


Future Free Cash Flow Growth Rate: 2.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$39.20 Stability Price (EPV)

Undervalued by 59.72%


Discount Rate: 15.0%

$19.07 Book Price

Overvalued by 22.30%


Poor Cash Return on Invested Capital over the past 5 years

CVG has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

CVG has only created $7.65 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20112012201320142015
Free Cash Flow 108.30M 14.60M 146.20M 144.30M 140.10M
divided by
Invested Capital 1.52B 1.11B 1.00B 1.94B 1.80B
Cash ROIC 7.12% 1.31% 14.61% 7.45% 7.77%

Inconsistent Return on Equity over the past 5 years

CVG has generated adequate returns with capital that shareholders have invested. However, there has been some inconsistency from year-to-year. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

CVG has generated $10.51 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20112012201320142015
Net Income 328.30M 28.20M 58.50M 116.50M 168.40M
divided by
Stockholders' Equity 1.41B 1.37B 1.29B 1.23B 1.28B
Return on Equity 23.26% 2.06% 4.54% 9.49% 13.20%

Excellent Business Performance over the past 10 years

CVG has been able to maintain profitability in good times and bad. This could mean CVG has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

CVG has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Free Cash Flow 248.50M 107.60M 91.80M 189.80M 128.20M 108.30M 14.60M 146.20M 144.30M 140.10M

Good Balance Sheet

CVG's Total Assets double Total Liabilities. Its financial position is adequate. Remember to check Shareholders' Equity to see if it's stable or growing. It's one of the best measures of whether a company is creating value for shareholders.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Cash 235.90M 120.30M 240.00M 331.70M 186.10M 421.80M 638.50M 663.70M 211.90M 216.90M
Current Assets 930.20M 861.60M 978.00M 961.10M 705.50M 951.10M 1.10B 1.06B 890.90M 823.40M
Total Assets 2.54B 2.56B 2.84B 2.61B 2.13B 2.33B 2.04B 1.96B 2.52B 2.36B
Current Liabilities 595.90M 426.90M 798.20M 889.10M 471.20M 382.20M 286.50M 292.60M 368.50M 338.40M
Total Liabilities 1.09B 1.04B 1.69B 1.41B 941.20M 914.40M 666.00M 667.10M 1.29B 1.08B
Stockholder' Equity 1.46B 1.52B 1.15B 1.21B 1.18B 1.41B 1.37B 1.29B 1.23B 1.28B
Current Ratio 1.56 2.02 1.23 1.08 1.50 2.49 3.84 3.62 2.42 2.43
TL-to-TA 0.43 0.41 0.60 0.54 0.44 0.39 0.33 0.34 0.51 0.46

Consistent Reinvestment of Profits over the past 10 years

CVG has consistently retained profits. This may put CVG in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, CVG can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Retained Earnings 1.24B 1.40B 1.30B 1.22B 1.17B 1.50B 1.58B 1.61B 1.71B 1.85B
Retained Earnings Growth - 13.09% -6.81% -6.22% -4.60% 28.36% 5.56% 2.29% 5.75% 8.12%

Highly Competitive Industry over the past 10 years

It's likely that CVG is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely CVG invests heavily in R&D and Sales, General & Administrative expenses.

Only $3.10 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Net Income 166.20M 169.50M -92.90M -77.30M -74.70M 328.30M 28.20M 58.50M 116.50M 168.40M
divided by
Revenue 2.79B 2.84B 2.79B 2.83B 2.20B 2.26B 2.01B 2.05B 2.86B 2.95B
Net Profit Margin 5.96% 5.96% -3.33% -2.73% -3.39% 14.51% 1.41% 2.86% 4.08% 5.71%

Varying Pricing Power over the past 10 years

CVG has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. However, there is a substantial variation in their Gross Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$41.66 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Gross Profit 1.04B 1.01B 892.90M 901.40M 862.50M 2.21B 715.50M 711.00M 1.04B 1.07B
divided by
Revenue 2.79B 2.84B 2.79B 2.83B 2.20B 2.26B 2.01B 2.05B 2.86B 2.95B
Gross Margin 37.10% 35.38% 32.05% 31.88% 39.14% 97.82% 35.69% 34.75% 36.46% 36.37%

High Capital Intensity over the past 10 years

CVG spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

110.48% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Capital Expenditure 104.90M 102.30M 100.50M 74.90M 66.00M 88.30M 98.40M 63.80M 116.70M 109.20M
divided by
Net Income 166.20M 169.50M -92.90M -77.30M -74.70M 328.30M 28.20M 58.50M 116.50M 168.40M
Capital Expenditure Ratio 63.12% 60.35% -108.18% -96.90% -88.35% 26.90% 348.94% 109.06% 100.17% 64.85%

No Dividend History over the past 10 years

CVG has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 141.70M 137.70M 123.50M 122.80M 123.10M 122.90M 117.10M 109.20M 106.20M 104.70M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 23.78 16.60 6.25 10.96 13.26 12.77 16.03 21.11 20.81 25.26
Dividend Yield - - - - - - - - - -

Strong History of Stock Buybacks over the past 10 years

CVG has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Shares Outstanding 141.70M 137.70M 123.50M 122.80M 123.10M 122.90M 117.10M 109.20M 106.20M 104.70M
Stock Bought Back - 2.90% 11.50% 0.57% -0.24% 0.16% 4.95% 7.23% 2.82% 1.43%
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