What Do Analysts Think About Cognizant Technology Solutions Corporation’s (NASDAQ:CTSH) Future?

Based on Cognizant Technology Solutions Corporation’s (NASDAQ:CTSH) earnings update in March 2018, analysts seem extremely confident, with earnings expected to grow by a high double-digit of 61.04% in the upcoming year, compared with the past 5-year average growth rate of 10.15%. Currently with earnings of US$1.50b, we can expect this to reach US$2.42b by 2019. Below is a brief commentary around Cognizant Technology Solutions’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here. Check out our latest analysis for Cognizant Technology Solutions

What can we expect from Cognizant Technology Solutions in the longer term?

The 31 analysts covering CTSH view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
NasdaqGS:CTSH Future Profit July 10th 18
NasdaqGS:CTSH Future Profit July 10th 18
This results in an annual growth rate of 10.97% based on the most recent earnings level of US$1.50b to the final forecast of US$2.93b by 2021. EPS reaches $5.01 in the final year of forecast compared to the current $2.54 EPS today. Earnings growth appears to be a result of cost cutting activities, as revenues is expected to grow much slower than earnings. Margins is currently sitting at 10.16%, which is expected to expand to 15.64% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Cognizant Technology Solutions, I’ve put together three relevant factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Cognizant Technology Solutions worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Cognizant Technology Solutions is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cognizant Technology Solutions? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!