As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at business process outsourcing & consulting stocks, starting with Concentrix (NASDAQ:CNXC).
The sector stands to benefit from ongoing digital transformation, increasing corporate demand for cost efficiencies, and the growing complexity of regulatory and cybersecurity landscapes. For those that invest wisely, AI and automation capabilities could emerge as competitive advantages, enhancing process efficiencies for the companies themselves as well as their clients. On the flip side, AI could be a headwind as well as the technology could lower the barrier to entry in the space and give rise to more self-service solutions. Additional challenges in the years ahead could include wage inflation for highly skilled consultants and potential regulatory scrutiny on outsourcing practices—especially in industries like finance and healthcare where who has access to certain data matters greatly.
The 7 business process outsourcing & consulting stocks we track reported a satisfactory Q1. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 0.5% below.
In light of this news, share prices of the companies have held steady as they are up 3% on average since the latest earnings results.
Concentrix (NASDAQ:CNXC)
With a team of approximately 450,000 employees across 75 countries, Concentrix (NASDAQ:CNXC) designs and delivers customer experience solutions that help global brands manage their customer interactions across digital channels and contact centers.
Concentrix reported revenues of $2.37 billion, down 1.3% year on year. This print was in line with analysts’ expectations, and overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ EPS estimates.
“Our first quarter results demonstrate our progress as we win quality business and take advantage of GenAI opportunities, leveraging our unique technology and service capabilities to drive our clients’ success,” said Chris Caldwell, President and CEO of Concentrix.
Concentrix Total Revenue
The stock is up 23.2% since reporting and currently trades at $56.32.
Often retained for high-stakes matters with multibillion-dollar implications, CRA International (NASDAQ:CRAI) provides economic, financial, and management consulting services to corporations, law firms, and government agencies for litigation, regulatory proceedings, and business strategy.
CRA reported revenues of $181.9 million, up 5.9% year on year, outperforming analysts’ expectations by 3%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates and full-year revenue guidance slightly topping analysts’ expectations.
CRA Total Revenue
CRA pulled off the biggest analyst estimates beat and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 16.8% since reporting. It currently trades at $188.27.
Originally spun off from General Electric in 2005 to provide business process services, Genpact (NYSE:G) is a global professional services firm that helps businesses transform their operations through digital technology, AI, and data analytics solutions.
Genpact reported revenues of $1.21 billion, up 7.4% year on year, in line with analysts’ expectations. It was a slower quarter as it posted a slight miss of analysts’ EPS guidance for next quarter estimates and revenue guidance for next quarter meeting analysts’ expectations.
Genpact delivered the weakest full-year guidance update in the group. As expected, the stock is down 10% since the results and currently trades at $44.60.
With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE:CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.
CBIZ reported revenues of $838 million, up 69.5% year on year. This print came in 2.6% below analysts' expectations. Overall, it was a slower quarter as it also produced full-year revenue guidance missing analysts’ expectations.
CBIZ delivered the fastest revenue growth but had the weakest performance against analyst estimates among its peers. The stock is down 5.4% since reporting and currently trades at $73.08.
Founded in 2002 during a time of significant regulatory change in corporate America, Huron Consulting Group (NASDAQ:HURN) is a professional services company that helps organizations develop growth strategies, optimize operations, and implement digital transformation solutions.
Huron reported revenues of $404.1 million, up 11.2% year on year. This number surpassed analysts’ expectations by 0.8%. Overall, it was a strong quarter as it also put up a solid beat of analysts’ EPS estimates and a narrow beat of analysts’ full-year EPS guidance estimates.
The stock is up 2.7% since reporting and currently trades at $139.62.
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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