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Cognizant (CTSH) Q2 Earnings Beat Estimates, Revenues Up Y/Y
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Cognizant Technology Solutions Corp. (CTSH - Free Report) reported second-quarter 2018 non-GAAP earnings of $1.19 per share, which beat the Zacks Consensus Estimate of $1.10 and increased 28% from the year-ago quarter. The figure was better than management’s expectation of $1.09 per share.
Revenues of $4.01 billion missed the Zacks Consensus Estimate of $4.02 billion. Nevertheless, the figure increased 9.2% year over year driven by growth in all the four domains. The figure was within the guided range of $4-$4.04 billion.
The company adopted ASC 606 (new revenue standard), which positively impacted revenues by $31 million, income from operations by $38 million and earnings by 5 cents per share.
Quarter Details
Segment-wise, Financial services (36.7% of revenues), which includes insurance, banking and transaction processing, grew 4.5% year over year to $1.47 billion.
Healthcare (28.9% of revenues) grew 10.1% year over year to $1.16 billion. Top-line growth can be attributed to steady demand across payer clients and increasing interest in the company’s digital, analytics, cloud and virtualization solutions.
Products and Resources (21% of revenues) continued its growth momentum and improved 12.4% year over year to $840 million driven by growth in manufacturing and logistics clients.
Communications, Media and Technology (13.5% of revenues) were $541 million, up 15.8% from the year-ago quarter.
Region-wise, revenues from North America increased 7.6% year over year and represented 76.6% of total revenues. Europe revenues (17.2% of revenues) increased 19.2% from the year-ago quarter to $690 million. Rest of the World (6.2% of revenues) advanced 3.8% to $249 million.
Selling, general & administrative (SG&A) expenses, as a percentage of revenues, declined 110 basis points (bps) from the year-ago quarter to 20.1%.
Cognizant reported non-GAAP operating margin of 22%, which expanded 200 bps from the year-ago quarter.
In the quarter ended Jun 30, 2018, cash and cash equivalents (and short-term investments) were $4.25 billion, down from $4.83 billion reported as of Mar 31, 2018.
Cognizant Technology Solutions Corporation Price, Consensus and EPS Surprise
For the third quarter of 2018, Cognizant expects revenues in the range of $4.06-$4.10 billion. Non-GAAP earnings are anticipated to be at least $1.13 per share. The Zacks Consensus Estimate for revenues and earnings is currently pegged at $4.12 billion and $1.14 per share, respectively.
For 2018, revenues are projected between $16.05 billion and $16.30.
Non-GAAP operating margin is expected to be roughly 21%. Non-GAAP earnings are projected to be at least $4.50 per share, up from the previous guidance of $4.47 per share.
The Zacks Consensus Estimate for revenues and earnings is currently pegged at $16.22 billion and $4.47 per share, respectively.
Zacks Rank & Stocks to Consider
Cognizant currently carries a Zacks Rank #3 (Hold).
Long-term earnings growth rate for Micron, Amazon and Apple is projected to be 8.2%, 26.5% and 10.9%, respectively.
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Cognizant (CTSH) Q2 Earnings Beat Estimates, Revenues Up Y/Y
Cognizant Technology Solutions Corp. (CTSH - Free Report) reported second-quarter 2018 non-GAAP earnings of $1.19 per share, which beat the Zacks Consensus Estimate of $1.10 and increased 28% from the year-ago quarter. The figure was better than management’s expectation of $1.09 per share.
Revenues of $4.01 billion missed the Zacks Consensus Estimate of $4.02 billion. Nevertheless, the figure increased 9.2% year over year driven by growth in all the four domains. The figure was within the guided range of $4-$4.04 billion.
The company adopted ASC 606 (new revenue standard), which positively impacted revenues by $31 million, income from operations by $38 million and earnings by 5 cents per share.
Quarter Details
Segment-wise, Financial services (36.7% of revenues), which includes insurance, banking and transaction processing, grew 4.5% year over year to $1.47 billion.
Healthcare (28.9% of revenues) grew 10.1% year over year to $1.16 billion. Top-line growth can be attributed to steady demand across payer clients and increasing interest in the company’s digital, analytics, cloud and virtualization solutions.
Products and Resources (21% of revenues) continued its growth momentum and improved 12.4% year over year to $840 million driven by growth in manufacturing and logistics clients.
Communications, Media and Technology (13.5% of revenues) were $541 million, up 15.8% from the year-ago quarter.
Region-wise, revenues from North America increased 7.6% year over year and represented 76.6% of total revenues. Europe revenues (17.2% of revenues) increased 19.2% from the year-ago quarter to $690 million. Rest of the World (6.2% of revenues) advanced 3.8% to $249 million.
Selling, general & administrative (SG&A) expenses, as a percentage of revenues, declined 110 basis points (bps) from the year-ago quarter to 20.1%.
Cognizant reported non-GAAP operating margin of 22%, which expanded 200 bps from the year-ago quarter.
In the quarter ended Jun 30, 2018, cash and cash equivalents (and short-term investments) were $4.25 billion, down from $4.83 billion reported as of Mar 31, 2018.
Cognizant Technology Solutions Corporation Price, Consensus and EPS Surprise
Cognizant Technology Solutions Corporation Price, Consensus and EPS Surprise | Cognizant Technology Solutions Corporation Quote
Guidance
For the third quarter of 2018, Cognizant expects revenues in the range of $4.06-$4.10 billion. Non-GAAP earnings are anticipated to be at least $1.13 per share. The Zacks Consensus Estimate for revenues and earnings is currently pegged at $4.12 billion and $1.14 per share, respectively.
For 2018, revenues are projected between $16.05 billion and $16.30.
Non-GAAP operating margin is expected to be roughly 21%. Non-GAAP earnings are projected to be at least $4.50 per share, up from the previous guidance of $4.47 per share.
The Zacks Consensus Estimate for revenues and earnings is currently pegged at $16.22 billion and $4.47 per share, respectively.
Zacks Rank & Stocks to Consider
Cognizant currently carries a Zacks Rank #3 (Hold).
Some other top-ranked stocks in the broader technology sector include Micron Technology (MU - Free Report) , Amazon.com, Inc. (AMZN - Free Report) and Apple Inc. (AAPL - Free Report) . While Micron and Amazon sport a Zacks Rank #1 (Strong Buy), Apple carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Long-term earnings growth rate for Micron, Amazon and Apple is projected to be 8.2%, 26.5% and 10.9%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>