NEW YORK (TheStreet) -- Cognizant Technology Solutions Corporation (Nasdaq:CTSH) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- The revenue growth came in higher than the industry average of 2.5%. Since the same quarter one year prior, revenues rose by 24.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CTSH has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.83, which clearly demonstrates the ability to cover short-term cash needs.
- COGNIZANT TECH SOLUTIONS has improved earnings per share by 17.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COGNIZANT TECH SOLUTIONS increased its bottom line by earning $2.85 versus $2.37 in the prior year. This year, the market expects an improvement in earnings ($3.36 versus $2.85).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the IT Services industry average. The net income increased by 16.9% when compared to the same quarter one year prior, going from $208.33 million to $243.65 million.
- Net operating cash flow has significantly increased by 123.02% to $101.76 million when compared to the same quarter last year. In addition, COGNIZANT TECH SOLUTIONS has also vastly surpassed the industry average cash flow growth rate of 11.07%.
--Written by a member of TheStreet Ratings Staff. TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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