Yahoo Finance Has Cognizant Technology Solutions Corporation (NASDAQ:CTSH) Improved Earnings Growth In Recent Times?
After looking at Cognizant Technology Solutions Corporation's (NasdaqGS:CTSH) latest earnings announcement (30 September 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
Check out our latest analysis for Cognizant Technology Solutions
Did CTSH beat its long-term earnings growth trend and its industry?
CTSH's trailing twelve-month earnings (from 30 September 2019) of US$2.1b has jumped 46% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.1%, indicating the rate at which CTSH is growing has accelerated. How has it been able to do this? Let's see whether it is only attributable to industry tailwinds, or if Cognizant Technology Solutions has experienced some company-specific growth.
In terms of returns from investment, Cognizant Technology Solutions has fallen short of achieving a 20% return on equity (ROE), recording 20% instead. However, its return on assets (ROA) of 12% exceeds the US IT industry of 6.2%, indicating Cognizant Technology Solutions has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Cognizant Technology Solutions’s debt level, has increased over the past 3 years from 20% to 21%.
What does this mean?
Though Cognizant Technology Solutions's past data is helpful, it is only one aspect of my investment thesis. While Cognizant Technology Solutions has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Cognizant Technology Solutions to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CTSH’s future growth? Take a look at our free research report of analyst consensus for CTSH’s outlook.
Financial Health: Are CTSH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.
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