Back to top

Image: Bigstock

Cognizant (CTSH) to Report Q4 Earnings: What's in Store?

Read MoreHide Full Article

Cognizant Technology Solutions (CTSH - Free Report) is scheduled to report fourth-quarter 2021 results on Feb 2.

Fourth-quarter 2021 revenues are expected between $4.75 billion and $4.79 billion, indicating growth of 13.3-14.3% on a cc basis from the year-ago quarter.

The Zacks Consensus Estimate for revenues is currently pegged at $4.79 billion, indicating an increase of 14.38% from the year-ago quarter.

The consensus mark for fourth-quarter earnings has remained unchanged at $1.04 per share over the past 30 days, suggesting year-over-year growth of 55.22%.

Cognizant beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average negative surprise being 4.57%.

Factors to Note

Cognizant’s fourth-quarter 2021 performance is expected to have benefited from its domain expertise in areas like automation, digital engineering, cloud and IoT. Increasing digital transformation efforts across enterprises might have contributed to the company’s digital bookings in the quarter to be reported.

In third-quarter 2021, revenues of $4.59 billion beat the consensus mark by 0.3% and improved 11.8% year over year. At constant currency (cc), revenues grew 11%. The top line comfortably surpassed management’s revenue guidance range of $4.69-$4.74 billion.

Cognizant’s strong digital offerings might have acted as a key catalyst. The company has been strategically building its business model around digital portfolio with the help of partnerships, investments and mergers and acquisitions worth $2.5 billion.

The company has been banking on strong partners to earn market share and increase revenue growth. Cognizant has been strategically partnering with industry specific businesses like in Financial Services and Life Sciences companies like Guidewire, Temenos, Veeva and Metadata.

Cognizant’s initiative to expand business in international markets is expected to have benefited the to-be-reported quarter's top line.

The company announced in November about increasing delivery capabilities in Adelaide, Australia and the U.K.. Cognizant has been looking to gain market share and enhance top-line growth with shift to digital and concentrating more on global markets.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Cognizant has an Earnings ESP of 0.00% and a Zacks Rank #2, currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that this has the right combination of elements to post an earnings beat in their upcoming releases:

Onto Innovation (ONTO - Free Report) has an Earnings ESP of +0.90% and a Zacks Rank #2. The company is scheduled to release fourth-quarter 2021 results on Feb 8. You can see the complete list of today’s Zacks #1 Rank stocks here.

Onto’s shares have gained 48.2% in the past year against the Zacks Nanotechnology industry's decline of 68.8%. Meanwhile, the Zacks Computer and Technology Sector has rallied 5.5%.

Advanced Micro Devices (AMD - Free Report) has an Earnings ESP of +3.47% and a Zacks Rank #2. The company is scheduled to report fourth-quarter 2021 results on Feb 1.

AMD’s shares have surged 20.1% in the past year compared with the Zacks Electronics - Semiconductors industry and the Computer and Technology sector's growth of 6% and 5.5%, respectively.

Fox (FOXA - Free Report) has an Earnings ESP of +175% and a Zacks Rank #2. It is slated to release third-quarter fiscal 2022 results on Feb 9.

FOXA’s shares have appreciated 25.8% in the past year against the Zacks Broadcast Radio and Television industry and the Zacks Consumer Discretionary sector’s decline of 23.6% and 19.1%, respectively.