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International Markets and Cognizant (CTSH): A Deep Dive for Investors

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Did you analyze how Cognizant (CTSH - Free Report) fared in its international operations for the quarter ending March 2024? Given the widespread global presence of this information technology consulting and outsourcing firm, scrutinizing the trends in international revenues becomes imperative to assess its financial strength and future growth possibilities.

In the modern, closely-knit global economic landscape, the capacity of a business to access foreign markets is often a key determinant of its financial well-being and growth path. Investors now place great importance on grasping the extent of a company's dependence on international markets, as it sheds light on the firm's earnings stability, its skill in leveraging various economic cycles and its broad growth potential.

Being present in international markets serves as a counterbalance to domestic economic challenges while offering chances to engage with more rapidly evolving economies. However, this kind of diversification introduces challenges like currency fluctuations, geopolitical uncertainties and varying market trends.

Our review of CTSH's last quarterly performance uncovered some notable trends in the revenue contributions from its international markets, which are commonly analyzed and tracked by Wall Street experts.

The recent quarter saw the company's total revenue reaching $4.76 billion, marking a decline of 1.1% from the prior-year quarter. Next, we'll examine the breakdown of CTSH's revenue from abroad to comprehend the significance of its international presence.

A Look into CTSH's International Revenue Streams

During the quarter, United Kingdom contributed $456 million in revenue, making up 9.6% of the total revenue. When compared to the consensus estimate of $492.34 million, this meant a surprise of -7.38%. Looking back, United Kingdom contributed $448 million, or 9.4%, in the previous quarter, and $478 million, or 9.9%, in the same quarter of the previous year.

Continental Europe generated $483 million in revenues for the company in the last quarter, constituting 10.2% of the total. This represented a surprise of -2.08% compared to the $493.27 million projected by Wall Street analysts. Comparatively, in the previous quarter, Continental Europe accounted for $470 million (9.9%), and in the year-ago quarter, it contributed $461 million (9.6%) to the total revenue.

Of the total revenue, $300 million came from Rest of World during the last fiscal quarter, accounting for 6.3%. This represented a surprise of +49.26% as analysts had expected the region to contribute $200.99 million to the total revenue. In comparison, the region contributed $310 million, or 6.5%, and $328 million, or 6.8%, to total revenue in the previous and year-ago quarters, respectively.

Projected Revenues in Foreign Markets

For the current fiscal quarter, it is anticipated by Wall Street analysts that Cognizant will report a total revenue of $4.79 billion, which reflects a decline of 2% from the same quarter in the previous year. The revenue contributions are expected to be 10.4% from United Kingdom ($496.65 million), 10.7% from Continental Europe ($511.29 million) and 6% from Rest of World ($288.53 million).

For the full year, the company is projected to achieve a total revenue of $19.36 billion, which signifies a rise of 0% from the last year. The share of this revenue from various regions is expected to be: United Kingdom at 10.2% ($1.98 billion), Continental Europe at 10.4% ($2 billion) and Rest of World at 6.3% ($1.22 billion).

Concluding Remarks

Relying on international markets for revenues, Cognizant faces both prospects and perils. Thus, tracking the company's international revenue trends is essential for accurately projecting its future trajectory.

In an era of growing international interdependencies and escalating geopolitical disputes, Wall Street analysts are vigilant in tracking these trends for businesses with a global reach, in order to refine their predictions of earnings. It should be noted, however, that a multitude of other elements, such as a company's domestic position, also play a significant role in shaping the earnings forecasts.

At Zacks, we place significant importance on a company's evolving earnings outlook. This is based on empirical evidence demonstrating its strong influence on a stock's short -term price movements. Invariably, there exists a positive relationship -- an upward revision in earnings estimates is typically mirrored by a rise in the stock price.

The Zacks Rank, our proprietary stock rating tool, comes with an externally validated impressive track record. It effectively utilizes shifts in earnings projections to act as a dependable barometer for forecasting short-term stock price trends.

Currently, Cognizant holds a Zacks Rank #3 (Hold), signifying its potential to match the overall market's performance in the forthcoming period. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

A Review of Cognizant's Recent Stock Market Performance

Over the past month, the stock has lost 6.9% versus the Zacks S&P 500 composite's 1.6% decrease. The Zacks Computer and Technology sector, of which Cognizant is a part, has declined 0.7% over the same period. The company's shares have declined 14.1% over the past three months compared to the S&P 500's 3.8% increase. Over the same period, the sector has risen 4.2%.

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