International Business Machines Corporation (NYSE: IBM) and Convergys Corporation (NYSE:CVG) are both mid-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, profitabiliy, earnings, analyst recommendations, risk and valuation.
Volatility and Risk
International Business Machines Corporation has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Convergys Corporation has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.
International Business Machines Corporation pays an annual dividend of $6.00 per share and has a dividend yield of 4.1%. Convergys Corporation pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. International Business Machines Corporation pays out 49.9% of its earnings in the form of a dividend. Convergys Corporation pays out 30.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. International Business Machines Corporation has raised its dividend for 4 consecutive years and Convergys Corporation has raised its dividend for 17 consecutive years.
This table compares International Business Machines Corporation and Convergys Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|International Business Machines Corporation||14.58%||71.53%||11.02%|
Valuation & Earnings
This table compares International Business Machines Corporation and Convergys Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|International Business Machines Corporation||$79.39 billion||1.74||$17.94 billion||$12.03||12.23|
|Convergys Corporation||$2.92 billion||0.78||$366.90 million||$1.33||18.11|
International Business Machines Corporation has higher revenue and earnings than Convergys Corporation. International Business Machines Corporation is trading at a lower price-to-earnings ratio than Convergys Corporation, indicating that it is currently the more affordable of the two stocks.
This is a summary of current recommendations and price targets for International Business Machines Corporation and Convergys Corporation, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|International Business Machines Corporation||6||13||7||0||2.04|
International Business Machines Corporation presently has a consensus target price of $159.85, suggesting a potential upside of 8.68%. Convergys Corporation has a consensus target price of $30.00, suggesting a potential upside of 24.53%. Given Convergys Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Convergys Corporation is more favorable than International Business Machines Corporation.
Insider & Institutional Ownership
58.2% of International Business Machines Corporation shares are owned by institutional investors. Comparatively, 99.7% of Convergys Corporation shares are owned by institutional investors. 0.2% of International Business Machines Corporation shares are owned by insiders. Comparatively, 1.7% of Convergys Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
International Business Machines Corporation beats Convergys Corporation on 9 of the 17 factors compared between the two stocks.
International Business Machines Corporation Company Profile
International Business Machines Corporation (IBM) is a technology company. The Company operates through five segments: Cognitive Solutions, Global Business Services (GBS), Technology Services & Cloud Platforms, Systems and Global Financing. The Cognitive Solutions segment delivers a spectrum of capabilities, from descriptive, predictive and prescriptive analytics to cognitive systems. Cognitive Solutions includes Watson, a cognitive computing platform that has the ability to interact in natural language, process big data, and learn from interactions with people and computers. The GBS segment provides clients with consulting, application management services and global process services. The Technology Services & Cloud Platforms segment provides information technology infrastructure services. The Systems segment provides clients with infrastructure technologies. The Global Financing segment includes client financing, commercial financing, and remanufacturing and remarketing.
Convergys Corporation Company Profile
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.
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