Analysts Expect Cognizant’s Revenue to Rise in Fiscal 2018



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.

Analysts expect peers Accenture (ACN), Wipro (WIT), and Infosys (INFY) to post revenue increases of 12.5%, 1%, and 6.9%, respectively, in fiscal 2018. 

The projected rise in revenue during fiscal 2018 and beyond is also expected to impact profit margins positively for CTSH in the forecasted period.

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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.


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