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S&P 500 (NYSE:SPY) component Cognizant Technology (NASDAQ:CTSH) will unveil its latest earnings on Wednesday, November 7, 2012. Cognizant Technology Solutions provides custom IT consulting and technology services as well as outsourcing services for companies in North America, Europe, and Asia.
Cognizant Technology Earnings Preview Cheat Sheet
Wall St. Earnings Expectations: The average estimate of analysts is for profit of 87 cents per share, a rise of 19.2% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved up from 86 cents. Between one and three months ago, the average estimate moved up. It has been unchanged at 87 cents during the last month. For the year, analysts are projecting net income of $3.38 per share, a rise of 18.6% from last year.
Past Earnings Performance: Last quarter, the company topped estimates by 0 cents, coming in at profit of 82 cents per share against a mean estimate of net income of 80 cents. The company fell in line with estimates in the first quarter.
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A Look Back: In the second quarter, profit rose 21.1% to $251.9 million (82 cents a share) from $208 million (67 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 20.9% to $1.8 billion from $1.49 billion.
Wall St. Revenue Expectations: Analysts predict a rise of 17.5% in revenue from the year-earlier quarter to $1.88 billion.
Stock Price Performance: Between October 4, 2012 and November 1, 2012, the stock price dropped $4.62 (-6.4%), from $71.83 to $67.21. The stock price saw one of its best stretches over the last year between January 13, 2012 and January 25, 2012, when shares rose for eight straight days, increasing 5% (+$3.43) over that span. It saw one of its worst periods between February 3, 2012 and February 10, 2012 when shares fell for six straight days, dropping 4.5% (-$3.27) over that span.
The company enters this earnings announcement with substantial revenue momentum. The company has averaged year-over-year revenue growth of 26% over the last four quarters.
This upcoming earnings announcement will be a chance to build on positive earnings momentum over the last three quarters. Net income rose 16.5% in the fourth quarter of the last fiscal year and 17% in the first quarter before increasing again in the second quarter.
Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 3.61 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 4.11 in the first quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 12.7% to $1.15 billion while assets decreased 1.1% to $4.15 billion.
Analyst Ratings: With 21 analysts rating the stock a buy, none rating it a sell and one rating the stock a hold, there are indications of a bullish stance by analysts.
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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)
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