Since Cognizant Technology Solutions Corporation (NASDAQ:CTSH) released its earnings in September 2018, analysts seem highly optimistic, as a 68% rise in profits is expected in the upcoming year, relative to the previous 5-year average growth rate of 4.5%. By 2019, we can expect Cognizant Technology Solutions’s bottom line to reach US$2.5b, a jump from the current trailing-twelve-month US$1.5b. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Cognizant Technology Solutions in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How is Cognizant Technology Solutions going to perform in the near future?
The longer term expectations from the 30 analysts of CTSH is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of CTSH’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 16% based on the most recent earnings level of US$1.5b to the final forecast of US$3.1b by 2021. This leads to an EPS of $5.28 in the final year of projections relative to the current EPS of $2.54. Margins are currently sitting at 10%, which is expected to expand to 17% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Cognizant Technology Solutions, I’ve compiled three key aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Cognizant Technology Solutions worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Cognizant Technology Solutions is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cognizant Technology Solutions? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.