Conduent (NYSE: CNDT) and Convergys Corporation (NYSE:CVG) are both mid-cap business services companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, institutional ownership, earnings, profitability and dividends.

Analyst Recommendations

This is a summary of current recommendations and price targets for Conduent and Convergys Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Conduent 0 5 3 0 2.38
Convergys Corporation 0 4 1 0 2.20

Conduent presently has a consensus target price of $18.50, indicating a potential upside of 19.12%. Convergys Corporation has a consensus target price of $26.00, indicating a potential upside of 9.43%. Given Conduent’s stronger consensus rating and higher probable upside, analysts plainly believe Conduent is more favorable than Convergys Corporation.

Profitability

This table compares Conduent and Convergys Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Conduent -16.18% 5.45% 2.35%
Convergys Corporation 4.54% 13.92% 7.85%

Dividends

Convergys Corporation pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. Conduent does not pay a dividend. Convergys Corporation pays out 30.8% of its earnings in the form of a dividend. Convergys Corporation has raised its dividend for 4 consecutive years.

Earnings & Valuation

This table compares Conduent and Convergys Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Conduent $6.41 billion 0.51 -$983.00 million ($4.85) -3.20
Convergys Corporation $2.91 billion 0.75 $143.00 million $1.30 18.28

Convergys Corporation has higher revenue, but lower earnings than Conduent. Conduent is trading at a lower price-to-earnings ratio than Convergys Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

85.5% of Conduent shares are held by institutional investors. Comparatively, 94.1% of Convergys Corporation shares are held by institutional investors. 0.0% of Conduent shares are held by company insiders. Comparatively, 1.7% of Convergys Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Convergys Corporation beats Conduent on 10 of the 16 factors compared between the two stocks.

About Conduent

Conduent Incorporated is a provider of business process services, including transaction-intensive processing, analytics and automation services. The Company’s segments include Commercial Industries, Healthcare and Public Sector. The Commercial Industries segment provides business process services and customized solutions to clients in a range of industries (other than healthcare). The Healthcare segment provides industry-centric business process services to clients across the healthcare industry, including providers, payers, employers, pharmaceutical and life science companies and government agencies. The Public Sector segment provides government-centric business process services and subject matter experts to the United States federal, state and local and foreign governments. The Government Health Enterprise (HE) Medicaid Platform for all current state clients and Student Loan businesses are included in Other.

About Convergys Corporation

Convergys Corporation is engaged in customer experience outsourcing. The Company’s geographical segments include North America and Rest of World. The Company offers services across industries, including communications and media, technology, financial services, retail, government and healthcare. The Company helps businesses to create customer experiences across multiple interaction channels, such as voice, chat, e-mail and interactive voice response. The Company provides solutions across the customer lifecycle, including sales, customer service, technical support, customer retention and collections. Its omni-channel contact center technology solutions include multichannel interaction solutions, cross-channel integration framework and robotic process automation. It offers analytics and consulting, and software solutions, including integrated customer experience analytics, post-contact surveys, relational loyalty research, and customer segmentation and profiling.

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