Cognizant Tech

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.