Stock Watch: Cognizant Technology Solutions (CTSH) Annual Report 2014

Cognizant_LogoCognizant_Logo

Cognizant Technology Solutions (CTSH in NASDAQ) is an American multinational corporation, with its headquarter in in Teaneck, New Jersey. The company provides custom information technology, consulting and business process outsourcing services, dedicated to helping the world’s leading companies build stronger businesses. The Company operates in four segments: Financial Services, Healthcare, Manufacturing, Retail and Logistics and Other, which include Communications, Information, Media and Entertainment, and High Technology. In 2011, the Fortune magazine named it as the world’s third most admired IT services company after Accenture and IBM. Cognizant Technology Solutions Corporation was incorporated on April 6, 1988 and launched its first IPO in 1998, and is now included in  the NASDAQ-100 and the S&P 500 indices.

The company’s stock currently trades at $62.06 with 52 weeks high and low are $ 63.189 / $ 41.51 respectively.

The Percent of Sector wise Revenue Earned By Cognizant (CTSH) in 2013

Sectors Total Revenue (%) Till Mar 31, 2013 Services Include
 

 

 

Financial Services

 

 

 

42%

Service to the financial institutions like banks, investment firms and insurance companies, global property and casualty insurers, life insurers, reinsurance firms and insurance brokers. The Company focuses on operations, including: business acquisition, policy administration, claims processing, management reporting, regulatory compliance and reinsurance.
 

 

Healthcare

 

 

 

25.6%

The Company’s Healthcare segment serves healthcare and life sciences companies. The Company works with global healthcare organizations, including healthcare payers, providers and pharmacy benefit managers.
 

 

Manufacturing/Retail/Logistics

 

 

21.1%

The company provided  outsourcing, business consulting and technology services to sub-sectors including industrial, automotive, process logistics and retail.
 

 

Others

 

 

11.2%

The Company’s Other business segment includes the Communications, Information, Media and Entertainment and High Technology operating segments. The Company’s communications industry practice serves communications service (cable, wireless and wire-line) providers, equipment vendors and software vendors.

 

Some Relevant Data To Evaluate Cognizant (CTSH), Financially on December 31, 2014

  Amount in US$  
Profit Margin 14.02%
Revenue 10.26 billion
Revenue Per Share $16.88 Figure for last 12 months
Total Debt/Equity 21.16 As of 31-Dec-2014
Current Ratio 2.60 As of 31-Dec-2014. It is the ratio between total current assets and total current liabilities
Book Value Per Share 12.70 As of 31-Dec-2014.
Return on Asset 11.87% Figure for last 12 months
Earnings Per Share $2.35
P/E Ratio 26.41 It is the multiple of earnings per share of the market price

 

Why Cognizant (CSTH) is included in the stock watch?

Cognizant, which gets nearly 80 percent of revenue from North America, but has most of its employees in India, forecasts 2015 revenue growth of at least by 19%. The company forecasts higher revenue growth as ‘Health care’ spending rises in 2015. That was higher than the 16.1% achieved in 2014, the lowest in the Teaneck, New Jersey-based company’s 20-year history. The company’s healthcare business, which accounts for about a quarter of revenue, was the fastest growing in the year ended December. The company has projected 19% revenue growth for this year (2015) to $12.21 billion and $2.88 billion in first quarter (January-March, 2015). Revenue for the fourth quarter (October-December) rose 16.4% year-on-year (YoY) to $2.74 billion, which is up 6.2% sequentially. Net income for 2014 was $1.44 billion as against $1.23 billion in 2013 and 11.9 percent up in the fourth quarter to $363 million.

The company added 11,800 techies during the quarter (Q4, 2014), taking its headcount to 211,500 by the year-end. Like its Indian rivals Tata Consultancy Services, and Infosys Ltd, Cognizant also get the largest chunk (42%) of its revenue from financial services. The Company also works with media and entertainment companies including information service providers, publishers, broadcasters, and movie, music and video game companies. Cognizant Technology Solutions delivers high-quality, cost-effective, full life cycle solutions to complex software development and maintenance problems that companies face as they change to e-business, With its revenue growing at a rate around 26% each year (Dec 2010> $4,592 million, 2011> $6,121 million, 2012> $7,346 million, 2103> $8,843 million and 2014> $10,263 million), an investment in Cognizant (CSTH) seems to be sound.

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About the Author

Sandra
I am working as Editor in Chief for Financeninvestments.com. Writing on Financial Topics is my passion. You can find me on , Seeking Alpha Instablogs or join our Facebook Community, s. FNI is a great Community for financial bloggers and writers. Get everything you wanted to know about your finance and investment related matters such as mutual funds, banking, retirement, economics and much more.

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