New Lifetime High Reached By Cognizant Technology Solutions (CTSH)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Cognizant Technology Solutions ( CTSH) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Cognizant Technology Solutions as such a stock due to the following factors:

  • CTSH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $159.9 million.
  • CTSH has traded 496,247 shares today.
  • CTSH is trading at a new lifetime high.

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More details on CTSH:

Cognizant Technology Solutions Corporation provides information technology (IT), consulting, and business process services worldwide. The company operates through four segments: Financial Services, Healthcare, Manufacturing/Retail/Logistics, and Other. CTSH has a PE ratio of 27. Currently there are 16 analysts that rate Cognizant Technology Solutions a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Cognizant Technology Solutions has been 3.3 million shares per day over the past 30 days. Cognizant Technology has a market cap of $39.5 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.71 and a short float of 0.7% with 2.01 days to cover. Shares are up 24.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cognizant Technology Solutions as a buy. 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, reasonable valuation levels, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 22.5%. Since the same quarter one year prior, revenues rose by 20.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CTSH's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.08, which clearly demonstrates the ability to cover short-term cash needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.59% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • COGNIZANT TECH SOLUTIONS has improved earnings per share by 8.8% 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 $2.35 versus $2.02 in the prior year. This year, the market expects an improvement in earnings ($2.96 versus $2.35).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 9.8% when compared to the same quarter one year prior, going from $348.88 million to $382.90 million.

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