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Cognizant (CTSH) to Report Q1 Earnings: What's in Store?
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Cognizant Technology Solutions (CTSH - Free Report) is set to report first-quarter 2020 results on May 7.
On Apr 9, Cognizant reiterated its first-quarter 2020 expectations in response to the impact of the coronavirus pandemic on its business operations.
For the quarter, revenues are expected between $4.22 billion and $4.23 billion, up 2.7-2.9% (3.4-3.6% in constant currency) year over year, including a negative 50-basis point impact from the exit of certain content services. The Zacks Consensus Estimate for revenues is currently pegged at $4.23 billion, indicating growth of 2.9% from the figure reported in the year-ago quarter.
The consensus mark for first-quarter earnings moved 2.2% south to 93 cents over the past 30 days. The estimate, however, suggests a year-over-year increase of 2.2%.
Notably, the company beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, the average negative surprise being 1.2%.
Let’s see how things have shaped up for this announcement.
Factors to Consider
Cognizant’s first-quarter results are likely to have benefited from its capabilities in areas like automation, digital engineering, cloud and IoT.
Per management, financial performance in the first two months of the quarter was on track, driven by strong performance of the North America market.
Cognizant Technology Solutions Corporation Price and EPS Surprise
Remarkably, solid demand for digital engineering, cloud infrastructure, IoT and analytics solutions are expected to have driven the company’s product and resource revenues in the to-be-reported quarter.
Moreover, the communications, media and technology segment is likely to have benefited from robust demand for digital engineering services. However, the segment’s top-line results might reflect the negative impact of declining content-services demand.
Cognizant expects its Healthcare business to have been hurt by consolidation in the healthcare industry. Nevertheless, steady demand for digital operations and cloud-based environments is likely to have aided Life Sciences in the to-be-reported quarter.
However, Cognizant's business was largely disrupted in March due to delays in project fulfillment as delivery, particularly in India and the Philippines, shifted to work from home.
Moreover, a reduced client demand, primarily in the travel and hospitality industries hit by the coronavirus-led lockdown, is expected to have thwarted top-line growth in the soon to-be reported quarter.
Further, expenses pertaining to the company’s acquisition of Code Zero Consulting and Lev are likely to be reflected in the first-quarter results.
Key Developments in Q1
In the first quarter, Cognizant acquired Code Zero Consulting, a provider of consulting and implementation services for cloud-based Configure-Price-Quote (CPQ) and billing solutions to enhance its cloud solutions portfolio, and Salesforce CPQ and billing capabilities.
In addition, the company entered into an agreement to acquire Lev, a privately-held, digital marketing consultancy in the United States, to further expand Cognizant's Salesforce practice.
Moreover, Cognizant announced a multi-year agreement with Con Edison to build an IT infrastructure that furthers the latter’s commitment to efficiently provide its customers in New York City and surrounding areas with clean and reliable energy.
Notably, Cognizant drew $1.74 billion from its revolving credit facility on Mar 23 to strengthen the company’s financial flexibility. This brought total cash and investment balance as of Mar 31 to $4.7 billion or net cash of $2.2 billion. Notably, the company has no significant debt maturities until 2023.
What Our Model Says
According to the Zacks model, the combination of a positive Earnings ESP and 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 -0.89% and currently carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:
Inphi Corporation has an Earnings ESP of +20.04% and carries a Zacks Rank of 2.
Take Two Interactive (TTWO - Free Report) has an Earnings ESP of +13.24% and a Zacks Rank #2.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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Cognizant (CTSH) to Report Q1 Earnings: What's in Store?
Cognizant Technology Solutions (CTSH - Free Report) is set to report first-quarter 2020 results on May 7.
On Apr 9, Cognizant reiterated its first-quarter 2020 expectations in response to the impact of the coronavirus pandemic on its business operations.
For the quarter, revenues are expected between $4.22 billion and $4.23 billion, up 2.7-2.9% (3.4-3.6% in constant currency) year over year, including a negative 50-basis point impact from the exit of certain content services.
The Zacks Consensus Estimate for revenues is currently pegged at $4.23 billion, indicating growth of 2.9% from the figure reported in the year-ago quarter.
The consensus mark for first-quarter earnings moved 2.2% south to 93 cents over the past 30 days. The estimate, however, suggests a year-over-year increase of 2.2%.
Notably, the company beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, the average negative surprise being 1.2%.
Let’s see how things have shaped up for this announcement.
Factors to Consider
Cognizant’s first-quarter results are likely to have benefited from its capabilities in areas like automation, digital engineering, cloud and IoT.
Per management, financial performance in the first two months of the quarter was on track, driven by strong performance of the North America market.
Cognizant Technology Solutions Corporation Price and EPS Surprise
Cognizant Technology Solutions Corporation price-eps-surprise | Cognizant Technology Solutions Corporation Quote
Remarkably, solid demand for digital engineering, cloud infrastructure, IoT and analytics solutions are expected to have driven the company’s product and resource revenues in the to-be-reported quarter.
Moreover, the communications, media and technology segment is likely to have benefited from robust demand for digital engineering services. However, the segment’s top-line results might reflect the negative impact of declining content-services demand.
Cognizant expects its Healthcare business to have been hurt by consolidation in the healthcare industry. Nevertheless, steady demand for digital operations and cloud-based environments is likely to have aided Life Sciences in the to-be-reported quarter.
However, Cognizant's business was largely disrupted in March due to delays in project fulfillment as delivery, particularly in India and the Philippines, shifted to work from home.
Moreover, a reduced client demand, primarily in the travel and hospitality industries hit by the coronavirus-led lockdown, is expected to have thwarted top-line growth in the soon to-be reported quarter.
Further, expenses pertaining to the company’s acquisition of Code Zero Consulting and Lev are likely to be reflected in the first-quarter results.
Key Developments in Q1
In the first quarter, Cognizant acquired Code Zero Consulting, a provider of consulting and implementation services for cloud-based Configure-Price-Quote (CPQ) and billing solutions to enhance its cloud solutions portfolio, and Salesforce CPQ and billing capabilities.
In addition, the company entered into an agreement to acquire Lev, a privately-held, digital marketing consultancy in the United States, to further expand Cognizant's Salesforce practice.
Moreover, Cognizant announced a multi-year agreement with Con Edison to build an IT infrastructure that furthers the latter’s commitment to efficiently provide its customers in New York City and surrounding areas with clean and reliable energy.
Notably, Cognizant drew $1.74 billion from its revolving credit facility on Mar 23 to strengthen the company’s financial flexibility. This brought total cash and investment balance as of Mar 31 to $4.7 billion or net cash of $2.2 billion. Notably, the company has no significant debt maturities until 2023.
What Our Model Says
According to the Zacks model, the combination of a positive Earnings ESP and 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 -0.89% and currently carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:
Shopify (SHOP - Free Report) has an Earnings ESP of +23.41% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Inphi Corporation has an Earnings ESP of +20.04% and carries a Zacks Rank of 2.
Take Two Interactive (TTWO - Free Report) has an Earnings ESP of +13.24% and a Zacks Rank #2.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>