Analyzing Convergys Corporation (CVG) & BroadSoft (BSFT)

Convergys Corporation (NYSE: CVG) and BroadSoft (NASDAQ:BSFT) are both business services companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitability, valuation and earnings.

Profitability

This table compares Convergys Corporation and BroadSoft’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Convergys Corporation 4.90% 14.46% 8.09%
BroadSoft -2.34% 4.72% 2.23%

Volatility and Risk

Convergys Corporation has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500. Comparatively, BroadSoft has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.

Earnings & Valuation

This table compares Convergys Corporation and BroadSoft’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Convergys Corporation $2.91 billion 0.74 $363.00 million $1.41 16.45
BroadSoft $354.53 million 3.89 $24.27 million ($0.29) -153.28

Convergys Corporation has higher revenue and earnings than BroadSoft. BroadSoft is trading at a lower price-to-earnings ratio than Convergys Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

98.7% of Convergys Corporation shares are owned by institutional investors. 1.7% of Convergys Corporation shares are owned by company insiders. Comparatively, 1.5% of BroadSoft shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Convergys Corporation pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. BroadSoft does not pay a dividend. Convergys Corporation pays out 28.4% of its earnings in the form of a dividend. Convergys Corporation has increased its dividend for 4 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Convergys Corporation and BroadSoft, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Convergys Corporation 0 1 1 0 2.50
BroadSoft 0 3 6 0 2.67

BroadSoft has a consensus price target of $47.00, indicating a potential upside of 5.74%. Given BroadSoft’s stronger consensus rating and higher possible upside, analysts clearly believe BroadSoft is more favorable than Convergys Corporation.

Summary

Convergys Corporation beats BroadSoft on 10 of the 17 factors compared between the two stocks.

About Convergys Corporation

Convergys Corporation is engaged in customer experience outsourcing. The Company’s geographical segments include North America and Rest of World. The Company offers services across industries, including communications and media, technology, financial services, retail, government and healthcare. The Company helps businesses to create customer experiences across multiple interaction channels, such as voice, chat, e-mail and interactive voice response. The Company provides solutions across the customer lifecycle, including sales, customer service, technical support, customer retention and collections. Its omni-channel contact center technology solutions include multichannel interaction solutions, cross-channel integration framework and robotic process automation. It offers analytics and consulting, and software solutions, including integrated customer experience analytics, post-contact surveys, relational loyalty research, and customer segmentation and profiling.

About BroadSoft

BroadSoft, Inc. is a global provider of software and services that enable telecommunications service providers to deliver hosted, cloud-based Unified Communications (UC) to their enterprise customers. The BroadSoft Business solution is a communications and collaboration offering that enables telecommunications service providers to offer businesses and other enterprises UC features and functionalities on a cloud-delivered basis without the need for traditional premise-based private branch exchange (PBX) equipment. BroadSoft Business includes its UC-One, Team-One and CC-One applications. The capabilities of the BroadSoft Business offering can be accessed through desk phones, smartphones, tablets, laptops and personal computers. Its BroadWorks SIP Trunking solution enables service providers to provide Internet protocol (IP) interconnectivity and additional services to enterprises that already have premise-based PBXs. Its training services include systems administration and provisioning.

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