Revenue expected to rise 9.6% in fiscal 2018
Previously, we learned that analysts expect Cognizant Technology Solutions’ (CTSH) revenue to rise ~10% YoY (year-over-year) in fiscal 1Q18. The company’s EPS (earnings per share) are expected to rise ~26% in the quarter.
Analysts expect Cognizant’s revenue to rise 9.8% YoY to $4.02 billion in 2Q18, 9.5% YoY to $4.12 billion in 3Q18, and 9.5% YoY to $4.18 billion in 4Q18. This outlook reflects a revenue increase of 9.6% YoY to $16.2 billion in fiscal 2018. Further, analysts expect CTSH’s revenue to rise 8.8% in fiscal 2019 to $17.7 billion and 8.5% to $19.2 billion.
Cognizant’s non-GAAP (generally accepted accounting principles) EPS are expected to rise 20.4% to $1.12 in 2Q18 and ~21% to $4.55 in fiscal 2018. Its EPS are then expected to rise ~13% to $5.13 in fiscal 2019.
The projected rise in revenue during fiscal 2018 and beyond is also expected to impact profit margins positively for CTSH in the forecasted period.
Earnings and operating profit
Cognizant has managed to grow profit margins at a faster rate compared to its revenue growth. Its EPS are expected to grow at a compound annual rate of 13.7% over the next five years compared with 17.4% in the last five years.
In fiscal 2016, the company reported EBITDA (earnings before interest, tax, depreciation, and amortization) of $3.0 billion, up 7.9%, while its operating profit rose over 7.5% to $2.63 billion. In fiscal 2017, its EBITDA rose 11%, while its operating profit increased ~10.5%.
Analysts expect Cognizant’s EBITDA to rise 5.2% in fiscal 2018, 15% in fiscal 2019, and 11% in fiscal 2020. The company’s operating profit is expected to rise 14% in fiscal 2018, 13% in fiscal 2019, and 6.3% in fiscal 2020.