The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how business process outsourcing & consulting stocks fared in Q1, starting with CBIZ (NYSE:CBZ).
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.
Thankfully, share prices of the companies have been resilient as they are up 5.8% on average since the latest earnings results.
CBIZ (NYSE:CBZ)
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 fell short of analysts’ expectations by 2.6%. Overall, it was a slower quarter for the company with full-year revenue guidance missing analysts’ expectations.
"CBIZ delivered positive first-quarter results. As we have demonstrated throughout our history, our operating model enables us to deliver strong earnings and cash flow in varying business climates and our first-quarter financial results are consistent with that history. We are also pleased to report that the Marcum-related integration work is proceeding on schedule, and we continue to experience strong employee and client retention rates and outstanding collaboration within our combined team," said Jerry Grisko, CBIZ President and Chief Executive Officer.
CBIZ Total Revenue
CBIZ achieved the fastest revenue growth but had the weakest performance against analyst estimates of the whole group. Still, the market seems discontent with the results. The stock is down 19.8% since reporting and currently trades at $74.25.
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 a solid beat of analysts’ EPS estimates and full-year revenue guidance slightly topping analysts’ expectations.
CRA Total Revenue
CRA scored 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 19.8% since reporting. It currently trades at $193.22.
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 with EPS guidance for next quarter missing estimates.
Genpact delivered the weakest full-year guidance update in the group. As expected, the stock is down 11% since the results and currently trades at $44.10.
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 number was in line with analysts’ expectations. Overall, it was a satisfactory quarter as it also logged a solid beat of analysts’ EPS estimates.
The stock is up 20.3% since reporting and currently trades at $55.01.
With a team of over 800 consultants holding advanced degrees in 90+ technical disciplines, Exponent (NASDAQ:EXPO) is a science and engineering consulting firm that investigates complex problems and provides expert analysis for clients across various industries.
Exponent reported revenues of $137.4 million, flat year on year. This print beat analysts’ expectations by 2.1%. More broadly, it was a mixed quarter as it recorded revenue guidance for next quarter slightly missing analysts’ expectations.
The stock is up 3.4% since reporting and currently trades at $80.41.
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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