Why Cognizant Technology Solutions (CTSH) Stock Is Sliding Today

NEW YORK (TheStreet) -- Shares of Cognizant Technology Solutions (CTSH) are dropping, down -2.95% to $48.35, after an analyst at Susquehanna Holdings (SUSQ) downgraded shares to a "neutral" rating from "positive" in a research note released this morning.

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TheStreet Ratings team rates COGNIZANT TECH SOLUTIONS as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate COGNIZANT TECH SOLUTIONS (CTSH) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 19.9%. 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 3.88, which clearly demonstrates the ability to cover short-term cash needs.
  • COGNIZANT TECH SOLUTIONS has improved earnings per share by 22.6% 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 $2.02 versus $1.72 in the prior year. This year, the market expects an improvement in earnings ($2.36 versus $2.02).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 22.8% when compared to the same quarter one year prior, going from $284.21 million to $348.88 million.
  • 40.87% is the gross profit margin for COGNIZANT TECH SOLUTIONS which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.40% is above that of the industry average.
  • You can view the full analysis from the report here: CTSH Ratings Report
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