Cognizant Technology (Nasdaq:CTSH) will release its second quarter results on Monday, August 6, 2012. Analysts are expecting the company to report a profit of 81 cents a share, up from 67 cents a year ago.
A business' earnings are the main determinant of its share price because earnings and the circumstances relating to them can indicate whether the business will be profitable and successful in the long run. SEE: Can Earnings Guidance Accurately Predict The Future?
What to Expect: Cognizant is expected to report 81 cents per share, up 20.9% from a year ago when the company reported earnings of 67 cents per share.
The consensus estimate, while unchanged in the past month, is down from 83 cents three months ago. Analysts are projecting earnings of $3.36 per share for the fiscal year.
Cognizant is expected to report revenue of $1.79 billion for the quarter, beating last year's figure of $1.49 billion by 20.5%. Revenue of $7.35 billion is expected for the fiscal year.
Company Performance: Over the past four quarters, Cognizant has reported double-digit revenue growth. On average, the figure has risen by 29.4%. The biggest change came in the second quarter of the last fiscal year when revenue rose 34.4%.
CTSH has a P/E ratio of 19.1, high compared to the industry average of 14.79. This could mean that the market is expecting big things over the next few months or years. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
Since May 3, 2012, the stock price has dipped 20.1% to $56.77 from $71.09. May 21, 2012 to June 28, 2012 marked one of Cognizant's worst periods, as the share price fell $4.88.
The Competition: Cognizant Technology Solutions provides custom IT consulting and technology services as well as outsourcing services for companies in North America, Europe, and Asia. Twenty-one of 22 analysts give Cognizant a buy rating. Opinion about the stock has worsened recently, as buy ratings have dropped slightly over the last three months.
The company's closest competitor in the software and programming industry is Infosys Ltd (INFY). Analysts are more optimistic about Cognizant than about Infosys Ltd. Only one out of 17 analysts rate the latter a buy.