(CTSH) Cognizant Technology Solutions – Estimates Still Climbing

October 3rd, 2009

Cognizant Tech’s (CTSH) estimates continue to climb, well after its latest earnings surprise.

Company Description

Cognizant provides software development and maintenance for companies transitioning into e-business. The company utilizes both on-site consultants and outsourced project members.

On Aug 4 Cognizant reported second-quarter results that included a 13% revenue growth. The company brought in $777 million. Coupled with an operating margin of 20.8%, above the company’s target, Cognizant earned just over $141 million.

Earnings were 36% higher, year-over-year, and yielded EPS of 47 cents. This was 12 cents higher than last year and beat the Zacks consensus estimate by a dime. The company has beaten estimates in 3 of the past 4 quarters.

Estimates Still Climbing

In the past month estimates saw 3 and 4 upward revisions for this year and next year, respectively. The Zacks Consensus Estimates for 2009 is now $1.67, up from $1.53 since the report. Forecasts for next year are averaging $1.82, up from $1.70.

Given these estimates the projected year-over-year growth rates are 16% and 9%.

Industry Comparison

Cognizant is at the top of the software industry, beating out 101 other companies. The company easily tops the industry norm for net profit margin with 16% compared to 3.3%. Its ROE is an impressive 23.5%, about 3 times the 8% that its peers average.

The Chart

Shares are currently developing a relatively narrow trading range. As you can see below, this was the situation in August before shares broke out an established a new, higher range.

Zacks Investment Research
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(CTSH) Cognizant Technology Solutions – Estimates Still Climbing

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