Why Convergys Corp. Shares Popped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Convergys Corp. (NYSE: CVG  ) rose 10% in Tuesday's early trading, and then settled to close up around 3% after the customer management specialist released solid first-quarter results.

So what: Quarterly revenue from continuing operations grew 23% year over year to $606 million -- including $86 million from its acquired Stream Global Services operations for the month of March -- which translated to adjusted earnings per share from continuing operations of $0.32. Analysts, on average, were looking for adjusted earnings of $0.29 per share on sales of $589.3 million.

Meanwhile, adjusted earnings before interest, taxes, depreciation and amortization rose 23% over the same period to $75 million.

For the full year 2014, Convergys expects revenue to exceed $2.9 billion, or a 40% increase over last year. This should result in roughly 30% growth for adjusted earnings per share to a range of $1.45 to $1.50. Adjusted EBITDA for 2014 is also expected to grow approximately 41% to a range of $350 million to $360 million.  By comparison, analysts were looking for 2014 earnings of $1.40 per share on revenue of $2.89 billion.

Finally, Convergys' board approved raising the company's quarterly dividend by a penny to $0.07 per share.

Now what: Convergys CEO Andrea Ayers added: "We are making good progress integrating the Stream business. Our expanded Convergys team is energized and moving forward as one organization to become the premier provider of customer management services in the world. 2014 will again be a year of leadership and profitable growth for Convergys."

Convergys' results and guidance were strong, but not to an overwhelming extent. I can understand, then, why it gave up some of its earlier gains. Even so, the stock does look reasonably priced at around 15 times this year's expected earnings. Assuming Convergys can indeed continue growing profitably from here, I think patient investors will be happy they held on.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2956370, ~/Articles/ArticleHandler.aspx, 9/2/2015 6:43:55 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

Today's Market

updated 9 hours ago Sponsored by:
DOW 16,058.35 -469.68 -2.84%
S&P 500 1,913.85 -58.33 -2.96%
NASD 4,636.11 -140.40 -2.94%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/1/2015 4:06 PM
CVG $22.25 Down -0.35 -1.55%
Convergys Corp CAPS Rating: ***