– An outsourced customer service provider that has de-rated due to a temporary slowdown in tech demand.
– The company now looks cheap both on an absolute and relative basis.
– Secular industry tailwinds as more businesses outsource over time.
– Business benefits from its scale (#2 worldwide) which lets CNXC compete for more/larger customers and generate higher margins than most peers.
– The company also boasts a sticky revenue base due to high switching costs associated with changing providers.
– Concentrix should be able to grow revenue at a 7% CAGR organically and EBITDA at 9% CAGR.
– Operating margins have rerated up from 8.3% in 2016 to 14.0% in 2022.
– Asset-light business with capex at only 2-3% of revenues.
– Trades at under 14x E2023 P/E versus 19x for its peers that have similar growth.
Exp. gain: not specified.
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