CVG  Convergys Corporation

Exchange

NYSE

Sector

Technology

Industry

EDP Services

Market Cap.

2.13B

Vuru Grade

62.61/100

Current Price

$22.51
-0.11 (-0.49%)

Growth Price

$30.98
Undervalued by 37.62%

Stability Price

$16.19
Overvalued by 28.07%

Company Metrics

  • P/E 16.1
  • P/S 0.73
  • P/B 1.63
  • EPS 1.4
  • Cash ROIC 8.56%
  • Cash Ratio 0.43
  • Dividend 0.36 / 1.6%
  • Avg. Vol. 931,832.00
  • Shares 94.62M
  • Market Cap. 2.13B

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 Corp (CVG) Upgraded at Zacks Investment Research
The Cerbat Gem - Apr 28, 2017
Convergys Corp logo Zacks Investment Research upgraded shares of Convergys Corp (NYSE:CVG) from a sell rating to a hold rating in a research note released on Tuesday.
Convergys Corp (CVG) Rating Increased to Hold at Zacks Investment Research - Transcript Daily
Convergys Corp (CVG) Upgraded to Hold by Zacks Investment Research - Markets Daily
Convergys Corp. Reveals 13% Decline In Q4 Bottom Line
Nasdaq - Feb 22, 2017
(RTTNews.com) - Convergys Corp. ( CVG ) reported a profit for fourth quarter that dropped from last year. The company said its earnings dropped to $47.6 million, or $0.47 per share.
Convergys Corp (CVG) Receives News Sentiment Rating of -0.36
Transcript Daily - 10 hours ago
Convergys Corp logo Headlines about Convergys Corp (NYSE:CVG) have trended negative this week, according to Alpha One Sentiment Analysis.
News Convergys Corp.CVG
Wall Street Journal - Feb 11, 2011
News Convergys Corp.CVG. Significant News Only. 04/27/17; Press Release. DirectView Completes Acquisition of Two Privately Held Texas-Based Security and Surveillance Companies With Combined Fiscal 2016 Revenue of Approximately $5.3 Million.
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
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
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.
Many converged at Convergys, now closing its Ogden call center
Standard-Examiner - Mar 28, 2017
Convergys Corp. got its start in August 1998, according to the Cincinnati Business Courier, when Cincinnati Bell Inc. spun off its billing and customer management divisions, Cincinnati Bell Information Systems and Matrixx Marketing, to launch the new ...
Convergys cutting up to 269 Phoenix jobs
AZCentral.com - Feb 23, 2017
Global outsourcing company Convergys Corp. said it will dismiss up to 269 employees at a facility on Camelback Road, though impacted workers will be given the option to apply to work at home or at another Phoenix location on Baseline Road.
GSA Capital Partners LLP Takes Position in Convergys Corp (CVG)
The Cerbat Gem - Apr 20, 2017
Convergys Corp logo GSA Capital Partners LLP purchased a new position in Convergys Corp (NYSE:CVG) during the fourth quarter, according to its most recent Form 13F filing with the Securities and Exchange Commission.
Convergys Corp (CVG) Cut to ā€œCā€ at TheStreet - Markets Daily
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.

$22.51 Current Price

$30.98 Growth Price (DCF)

Undervalued by 37.62%


Growth Rate Assumed by Market: -13.31%


Future Free Cash Flow Growth Rate: 4.7%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$16.19 Stability Price (EPV)

Overvalued by 28.07%


Discount Rate: 15.0%

$19.31 Book Price

Overvalued by 14.21%


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 $8.56 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 14.60M 146.20M 144.30M 140.10M 218.40M
divided by
Invested Capital 1.11B 1.00B 1.94B 1.80B 1.87B
Cash ROIC 1.31% 14.61% 7.45% 7.77% 11.66%

Poor Return on Equity over the past 5 years

CVG has shown an inability to deliver strong results for shareholders. This could be due to poor management, CVG operating in a highly competitive industry, or having a weak business in general.

CVG has only generated $7.88 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 28.20M 58.50M 116.50M 168.40M 133.00M
divided by
Stockholders' Equity 1.37B 1.29B 1.23B 1.28B 1.32B
Return on Equity 2.06% 4.54% 9.49% 13.20% 10.11%

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
2007200820092010201120122013201420152016
Free Cash Flow 107.60M 91.80M 189.80M 128.20M 108.30M 14.60M 146.20M 144.30M 140.10M 218.40M

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
2007200820092010201120122013201420152016
Cash 120.30M 240.00M 331.70M 186.10M 421.80M 638.50M 663.70M 211.90M 216.90M 151.20M
Current Assets 861.60M 978.00M 961.10M 705.50M 951.10M 1.10B 1.06B 890.90M 823.40M 784.80M
Total Assets 2.56B 2.84B 2.61B 2.13B 2.33B 2.04B 1.96B 2.52B 2.36B 2.37B
Current Liabilities 426.90M 798.20M 889.10M 471.20M 382.20M 286.50M 292.60M 368.50M 338.40M 347.60M
Total Liabilities 1.04B 1.69B 1.41B 941.20M 914.40M 666.00M 667.10M 1.29B 1.08B 1.06B
Stockholder' Equity 1.52B 1.15B 1.21B 1.18B 1.41B 1.37B 1.29B 1.23B 1.28B 1.32B
Current Ratio 2.02 1.23 1.08 1.50 2.49 3.84 3.62 2.42 2.43 2.26
TL-to-TA 0.41 0.60 0.54 0.44 0.39 0.33 0.34 0.51 0.46 0.45

Low or No Reinvestment of Profits over the past 10 years

CVG has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to CVG operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 1.40B 1.30B 1.22B 1.17B 1.50B 1.58B 1.61B 1.71B 1.85B 1.96B
Retained Earnings Growth - -6.81% -6.22% -4.60% 28.36% 5.56% 2.29% 5.75% 8.12% 5.89%

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 $2.96 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 169.50M -92.90M -77.30M -74.70M 328.30M 28.20M 58.50M 116.50M 168.40M 133.00M
divided by
Revenue 2.84B 2.79B 2.83B 2.20B 2.26B 2.01B 2.05B 2.86B 2.95B 2.91B
Net Profit Margin 5.96% -3.33% -2.73% -3.39% 14.51% 1.41% 2.86% 4.08% 5.71% 4.56%

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.

$41.55 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
2007200820092010201120122013201420152016
Gross Profit 1.01B 892.90M 901.40M 862.50M 2.21B 715.50M 711.00M 1.04B 1.07B 1.05B
divided by
Revenue 2.84B 2.79B 2.83B 2.20B 2.26B 2.01B 2.05B 2.86B 2.95B 2.91B
Gross Margin 35.38% 32.05% 31.88% 39.14% 97.82% 35.69% 34.75% 36.46% 36.37% 35.96%

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.

110.81% 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
2007200820092010201120122013201420152016
Capital Expenditure 102.30M 100.50M 74.90M 66.00M 88.30M 98.40M 63.80M 116.70M 109.20M 87.00M
divided by
Net Income 169.50M -92.90M -77.30M -74.70M 328.30M 28.20M 58.50M 116.50M 168.40M 133.00M
Capital Expenditure Ratio 60.35% -108.18% -96.90% -88.35% 26.90% 348.94% 109.06% 100.17% 64.85% 65.41%

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
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 137.70M 123.50M 122.80M 123.10M 122.90M 117.10M 109.20M 106.20M 104.70M 102.50M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 16.60 6.25 10.96 13.26 12.77 16.03 21.11 20.81 25.26 24.56
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
2007200820092010201120122013201420152016
Shares Outstanding 137.70M 123.50M 122.80M 123.10M 122.90M 117.10M 109.20M 106.20M 104.70M 102.50M
Stock Bought Back - 11.50% 0.57% -0.24% 0.16% 4.95% 7.23% 2.82% 1.43% 2.15%
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