The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Convergys beat slightly on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue shrank and GAAP earnings per share shrank significantly.
Gross margins dropped, operating margins increased, net margins dropped.
Convergys notched revenue of $507.6 million. The eight analysts polled by S&P Capital IQ wanted to see revenue of $500.5 million on the same basis. GAAP reported sales were 12% lower than the prior-year quarter's $576.9 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.26. The nine earnings estimates compiled by S&P Capital IQ averaged $0.21 per share. GAAP EPS of $0.24 for Q3 were 86% lower than the prior-year quarter's $1.75 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 35.8%, 100 basis points worse than the prior-year quarter. Operating margin was 8.0%, 50 basis points better than the prior-year quarter. Net margin was 5.5%, 3,150 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $509.2 million. On the bottom line, the average EPS estimate is $0.25.
Next year's average estimate for revenue is $2.00 billion. The average EPS estimate is $0.92.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 99 members out of 119 rating the stock outperform, and 20 members rating it underperform. Among 29 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 24 give Convergys a green thumbs-up, and five give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Convergys is outperform, with an average price target of $17.00.
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