Concentrix: 2 Reasons to Buy, 1 Reason to Stay Cautious

Concentrix (CNXC) trades at $59 per share and has grown its sales at a 15.8% compounded annual growth rate over the last five years, surpassing the average business services company. However, its earnings per share (EPS) have barely grown at 6.8% compounded annual growth rate over the last four years. Despite its flaws, Concentrix's merits compensate for its drawbacks, making it a potential buy at $59 per share.

Concentrix (CNXC) has been a standout performer in the business services sector, with a compounded annual growth rate (CAGR) of 15.8% in sales over the last five years. This growth rate significantly outpaces the average business services company, making it a notable player in its industry. However, a closer examination of its earnings per share (EPS) reveals a more nuanced picture. While EPS has grown at a CAGR of 6.8% over the last four years, this growth is considerably slower than the company's sales growth.

The discrepancy between sales and EPS growth can be attributed to several factors. One key driver is Concentrix's investment in advanced AI technologies. These investments have bolstered its service offerings, driving revenue growth but potentially impacting short-term earnings due to the high initial costs associated with technology adoption. Despite this, Concentrix has shown resilience, with analysts maintaining an 'Outperform' rating despite lowering the price target from $70 to $54 [3].

Another factor contributing to the slower EPS growth is the company's commitment to returning capital to shareholders. Concentrix has committed to redistributing over $240 million this year via dividends and share buybacks, which can impact EPS in the short term. However, this strategy reflects the company's ongoing investor confidence and commitment to shareholder value [3].

Despite these factors, Concentrix's merits still make it a potential buy at $59 per share. Its strong sales growth, coupled with its commitment to AI technologies and shareholder returns, position it well for future growth. The company's recent performance, including a 41.09% stock surge on Thursday following news of its merger with Vodafone New Zealand and a landmark cloud service deal, underscores its potential [3].

In conclusion, while Concentrix's EPS growth has lagged behind its sales growth, the company's strong fundamentals and strategic investments in AI technologies make it a promising investment. Investors should carefully consider these factors when evaluating Concentrix's potential.

References:
[1] https://www.tradingview.com/news/stockstory:241119e5a094b:0-cbiz-cbz-q2-earnings-report-preview-what-to-look-for/
[2] https://www.marketbeat.com/stocks/NASDAQ/CNXC/
[3] https://www.timothysykes.com/news/concentrix-corporation-cnxc-news-2025_03_27-2/