Cognizant Beats Earnings Estimates, Forecasts Optimistic Growth

Strategic Insights -

Cognizant Technology Solutions Corporation reported a 28.7% year-over-year increase in revenue to $959.7 million in the first quarter of 2010, exceeding the Zacks Consensus Estimate. The company's operating margin came in at 19.1%, while net income was $151.5 million, or 49 cents per share. Excluding stock-based compensation expense, net income was $163.4 million, or 53 cents per share. Management has increased its guidance for 2010, forecasting revenues of at least $4.1 billion, up 25% from 2009, and an estimated EPS of $2.10.

Key Takeaways:

  • Cognizant reported a 28.7% year-over-year increase in revenue to $959.7 million in the first quarter of 2010.
  • The company's operating margin came in at 19.1%, while net income was $151.5 million, or 49 cents per share.
  • Excluding stock-based compensation expense, net income was $163.4 million, or 53 cents per share.
  • Management has increased its guidance for 2010, forecasting revenues of at least $4.1 billion, up 25% from 2009.
  • EPS is estimated to be $2.10, excluding $0.16 of estimated stock-based compensation expense, estimated EPS is $2.26.
  • The company expects to win significant business in 2010, with IT spending expected to get a boost in the year.
  • Cognizant believes "offshoring" as a proportion of IT budgets will increase compared to 2009.
  • The company competes with Infosys Technologies Ltd. and Wipro Limited in the custom information technology space.

Statistics:

  • Revenue: $959.7 million (28.7% year-over-year increase)
  • Operating Margin: 19.1%
  • Net Income: $151.5 million (49 cents per share)
  • Excluding stock-based compensation expense, net income was $163.4 million (53 cents per share)
  • 2010 Revenue Guidance: at least $4.1 billion (up 25% from 2009)
  • 2010 EPS Guidance: $2.10 (excluding $0.16 of estimated stock-based compensation expense, estimated EPS is $2.26)

Sources:

  • Cognizant Technology Solutions Corporation (Nasdaq: CTSH)
  • Zacks Equity Research
  • Profit from the Pros newsletter