Insights

Why Conduent Stock Dropped 17% Today

What happened
Shares of business process outsourcing company Conduent (NASDAQ: CNDT) were down 16.8% today at 12:15 p.m. ET. The culprit? First-quarter 2022 earnings were in line with expectations and full-year outlook was reaffirmed, but some investors may have been hoping for a better report.  
Image source: Getty Images.

So what
Specifically, Conduent reported revenue of $967 million (down 6% year over year) and adjusted earnings per share of $0.10 (down 33% year over year) in Q1 2022. The company said the declines were primarily related to a reduction in government stimulus spending from a year ago.  
The company, which provides software to improve business and organization efficiency, reaffirmed its full-year 2022 outlook. Total revenue for the year is expected to be $3.83 billion to $3.98 billion, which would represent a 4.4% decrease from 2021 at the midpoint. Adjusted EBITDA profit margin is also expected to be about 10%, less than the 11% margin last year. The company did announce the sale of its Midas healthcare segment for $340 million in cash, but the sale of assets is generally excluded from earnings calculations.
Now what
Conduent isn’t a growth tech stock. Earlier this year on the full-year 2021 financial update, management provided a longer-term outlook that called for 2023 revenue to increase at just a low-single-digit percentage relative to 2022. Adjusted EBITDA margin is expected to rebound to about 11% next year.  
Given the thin profit margins, significant burden of debt ($1.28 billion in debt, $588 million in cash on balance), and lack of growth, it isn’t terribly surprising that Conduent stock is in retreat. Based on full-year 2022 expectations, shares currently trade for about six times enterprise value to one-year expected adjusted EBITDA.
Nicholas Rossolillo and his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. –

What happened

Shares of business process outsourcing company Conduent (NASDAQ: CNDT) were down 16.8% today at 12:15 p.m. ET. The culprit? First-quarter 2022 earnings were in line with expectations and full-year outlook was reaffirmed, but some investors may have been hoping for a better report.  

Image source: Getty Images.

So what

Specifically, Conduent reported revenue of $967 million (down 6% year over year) and adjusted earnings per share of $0.10 (down 33% year over year) in Q1 2022. The company said the declines were primarily related to a reduction in government stimulus spending from a year ago.  

The company, which provides software to improve business and organization efficiency, reaffirmed its full-year 2022 outlook. Total revenue for the year is expected to be $3.83 billion to $3.98 billion, which would represent a 4.4% decrease from 2021 at the midpoint. Adjusted EBITDA profit margin is also expected to be about 10%, less than the 11% margin last year. The company did announce the sale of its Midas healthcare segment for $340 million in cash, but the sale of assets is generally excluded from earnings calculations.

Now what

Conduent isn’t a growth tech stock. Earlier this year on the full-year 2021 financial update, management provided a longer-term outlook that called for 2023 revenue to increase at just a low-single-digit percentage relative to 2022. Adjusted EBITDA margin is expected to rebound to about 11% next year.  

Given the thin profit margins, significant burden of debt ($1.28 billion in debt, $588 million in cash on balance), and lack of growth, it isn’t terribly surprising that Conduent stock is in retreat. Based on full-year 2022 expectations, shares currently trade for about six times enterprise value to one-year expected adjusted EBITDA.

Nicholas Rossolillo and his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!