Cognizant Technology Solutions Corp Earnings: Double-Digit Growth Again

S&P 500 (NYSE:SPY) component Cognizant Technology Solutions Corporation (NASDAQ:CTSH) reported net income above Wall Street’s expectations for the fourth quarter. Cognizant Technology Solutions provides custom IT consulting and technology services as well as outsourcing services for companies in North America, Europe, and Asia.

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Cognizant Technology Solutions Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the business software and services company rose to $240.1 million (78 cents per share) vs. $206.2 million (66 cents per share) in the same quarter a year earlier. This marks a rise of 16.5% from the year earlier quarter.

Revenue: Rose 26.7% to $1.66 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: Cognizant Technology Solutions Corporation reported adjusted net income of 84 cents per share. By that measure, the company beat the mean estimate of 77 cents per share. Analysts were expecting revenue of $1.67 billion.

Quoting Management: “We are very pleased, once again, to deliver industry leading revenue growth in 2011 while maintaining stable margins and investing for our long-term success,” said Francisco D’Souza, CEO of Cognizant. “As a result of strong client relationships and continued investments in people, knowledge and technology, we believe that Cognizant remains uniquely positioned to help clients take advantage of the volatility in the marketplace and accomplish the dual mandates of driving costs and efficiencies in their core operations while transforming their businesses to fuel top-line growth. With business challenges driven by globalization, regulatory changes, virtualization and consolidation and a confluence of new technology architectures such as mobile, social, cloud and big data, clients are increasingly looking to a partner like Cognizant that can create new levels of business value.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 36.1%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 45.2% from the year earlier quarter.

The company has now seen net income rise in three straight quarters. In the third quarter, net income rose 11.5% and in the second quarter, the figure rose 20.8%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 2 cents in the third quarter, by one cent in the second quarter, and by 3 cents in the first quarter.

Gross margin shrank 0.6 percentage point to 41.5%. The contraction appeared to be driven by increased costs, which rose 28.1% from the year earlier quarter while revenue rose 26.7%.

Looking Forward: The average estimate for the first quarter of the next fiscal year is steady at 79 cents a share. The average estimate for the fiscal year has seen a bump from $2.83 per share sixty days ago to $2.84.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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