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.
