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Conduent Incorporated (NASDAQ:CNDT) Could Be Less Than A Year Away From Profitability

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  • CNDT

With the business potentially at an important milestone, we thought we'd take a closer look at Conduent Incorporated's (NASDAQ:CNDT) future prospects. Conduent Incorporated provides business process services with capabilities in transaction-intensive processing, analytics, and automation in the United States, Europe, and internationally. The US$1.1b market-cap company’s loss lessened since it announced a US$128m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$9.0m, as it approaches breakeven. The most pressing concern for investors is Conduent's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Conduent

According to the 5 industry analysts covering Conduent, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$12m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 99% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Conduent's growth isn’t the focus of this broad overview, though, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Conduent currently has a debt-to-equity ratio of 105%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Conduent, so if you are interested in understanding the company at a deeper level, take a look at Conduent's company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:

  1. Valuation: What is Conduent worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Conduent is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Conduent’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.