Financial Contrast: Convergys (CVG) & Aerohive Networks (HIVE)

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

Volatility & Risk

Convergys has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, Aerohive Networks has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Convergys and Aerohive Networks, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Convergys 0 4 0 0 2.00
Aerohive Networks 0 1 1 0 2.50

Convergys currently has a consensus price target of $26.83, indicating a potential upside of 8.24%. Aerohive Networks has a consensus price target of $5.25, indicating a potential upside of 28.05%. Given Aerohive Networks’ stronger consensus rating and higher probable upside, analysts plainly believe Aerohive Networks is more favorable than Convergys.

Dividends

Convergys pays an annual dividend of $0.44 per share and has a dividend yield of 1.8%. Aerohive Networks does not pay a dividend. Convergys pays out 23.5% of its earnings in the form of a dividend. Convergys has raised its dividend for 5 consecutive years.

Earnings and Valuation

This table compares Convergys and Aerohive Networks’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Convergys $2.79 billion 0.81 $121.40 million $1.87 13.26
Aerohive Networks $152.90 million 1.46 -$22.92 million ($0.41) -10.00

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

Profitability

This table compares Convergys and Aerohive Networks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Convergys 4.14% 12.76% 7.31%
Aerohive Networks -13.93% -95.00% -15.69%

Insider & Institutional Ownership

48.1% of Aerohive Networks shares are held by institutional investors. 1.7% of Convergys shares are held by insiders. Comparatively, 26.1% of Aerohive Networks shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

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

About Convergys

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.

About Aerohive Networks

Aerohive Networks, Inc., together with its subsidiaries, designs and develops cloud networking and enterprise Wi-Fi solutions in the Americas, Europe, the Middle East and Africa, and the Asia Pacific. The company provides hardware products, such as wireless access points, branch routers, and switches; tiered maintenance and support services comprising technical support, bug fixes, access to priority hardware replacement service, and unspecified upgrades; and Software as a Service subscriptions, including comparable maintenance and support services. Its cloud-based product comprises HiveManager NG, a network management application that features an updated user, improved troubleshooting, and expanded access to data and analytics, as well as an upgraded cloud-deployment platform. The company sells its products to industry verticals, including education, distributed enterprises, retail, healthcare, and healthcare through a network of authorized value-added resellers, value-added distributors, and managed service providers. Aerohive Networks, Inc. was incorporated in 2006 and is headquartered in Milpitas, California.

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