Head-To-Head Analysis: Convergys (CVG) & GoDaddy (GDDY)

Convergys (NYSE: CVG) and GoDaddy (NYSE:GDDY) are both business services companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Volatility and Risk

Convergys has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500. Comparatively, GoDaddy has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500.

Dividends

Convergys pays an annual dividend of $0.40 per share and has a dividend yield of 1.6%. GoDaddy does not pay a dividend. Convergys pays out 21.4% of its earnings in the form of a dividend. Convergys has raised its dividend for 5 consecutive years.

Valuation and Earnings

This table compares Convergys and GoDaddy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Convergys $2.79 billion 0.82 $121.40 million $1.87 13.32
GoDaddy $2.23 billion 5.18 $136.40 million $0.42 164.02

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

Institutional and Insider Ownership

87.4% of GoDaddy shares are held by institutional investors. 1.7% of Convergys shares are held by company insiders. Comparatively, 7.6% of GoDaddy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Convergys 4.14% 12.76% 7.31%
GoDaddy 6.18% 11.05% 0.99%

Analyst Recommendations

This is a summary of current ratings for Convergys and GoDaddy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Convergys 0 4 0 0 2.00
GoDaddy 1 6 12 0 2.58

Convergys currently has a consensus target price of $26.00, indicating a potential upside of 4.42%. GoDaddy has a consensus target price of $66.27, indicating a potential downside of 3.81%. Given Convergys’ higher possible upside, equities analysts clearly believe Convergys is more favorable than GoDaddy.

Summary

GoDaddy beats Convergys on 9 of the 17 factors compared between the two stocks.

Convergys Company Profile

Convergys Corporation provides customer management services to communications and media, technology, financial services, retail, healthcare, government, travel and hospitality, and other vertical markets worldwide. The company offers solutions across the customer lifecycle, including sales, customer service, technical support, customer retention, and collection, as well as security, compliance, and fraud solutions; and solutions in contact center technology comprising omni-channel interaction, cross-channel integration framework, real-time decisioning engine, robotic process automation, intelligent notification, campaign management, personalized care, personalized selling, agent productivity, and retention solutions. It also provides analytics and consulting, and software solutions, such as enterprise feedback management, integrated customer experience analytics, post-contact surveys, relational loyalty research, customer segmentation and profiling, call elimination analysis, analysis of customer effort, digital channel optimization, and integrated contact center analytics solutions, as well as voice of customer software. The company operates through 140 contact centers. Convergys Corporation was founded in 1998 and is headquartered in Cincinnati, Ohio.

GoDaddy Company Profile

GoDaddy Inc. designs and develops cloud-based technology products for small businesses, Web design professionals, and individuals in the United States and internationally. It provides domain name registration product that enables to engage customers at the initial stage of establishing a digital identity; hosting products, such as shared Website hosting, Website hosting on virtual private servers and virtual dedicated servers, managed hosting, and security. The company also offers presence products, including GoCentral, an online tool that enables customers to build Websites and online stores; and a range of marketing tools designed to help businesses acquire and engage customers, as well as search engine optimization that helps customers get their Websites found on search sites. In addition, the company offers business application products, including Microsoft Office 365, email accounts, email marketing, and telephony services. GoDaddy Inc. was incorporated in 2014 and is headquartered in Scottsdale, Arizona.

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