Cognizant is one of the largest IT services provider and a specialist in outsourcing services. The company is consistently counted among the top tech stocks to buy. Recently in October, the company reported its third-quarter 2020 earnings. Revenue came in at $4.2 billion, a small drop of 0.1% year-on-year and a drop of 0.7% on a constant currency basis. However, if we exclude the negative impact arising out of the exit from nonstrategic content service businesses, then the revenue actually was up 0.6% year-on-year.
3Q2020 Earnings Results
Segment-wise, the healthcare revenues were up 4.8% year-on-year and up 4.2% on a constant currency basis. The products and resources segment was the worst hit, with a drop in revenues of 4% on a year-on-year basis and a drop of 4.6% on a constant currency basis. The financial services segment saw a revenue drop of 1.5% year-on-year and 2.2% on a constant currency basis. Finally, the CMT segment saw a marginal drop of 0.2% year-on-year and on a constant currency basis. Adjusted GAAP EPS was $0.64 while the adjusted diluted EPS dropped 10.2% year-on-year to $0.97.
According to CEO Brian Humphries, “Highlights of the quarter include: continued commercial momentum with bookings growth in excess of 25% year over year, ongoing momentum in digital with revenue growth up 13% year over year, and continued strength in digital bookings and qualified pipeline, gross margin and cash flow strength, enabling us to continually invest in the business, and significantly increased and sustained financial flexibility on India earnings and cash.”
Performances Of The Top Tech Stocks To Buy
Cognizant’s stock is up 43% over the past 6 months. The company is currently trading at a 1.12% dividend yield with the price of the stock having closed at $78.5 on 11th December 2020. On a 5-year basis, the stock is up about 34%. Accenture, a larger peer of Cognizant, is up 21% over the past 6 months and currently trades at a 1.43% dividend yield. On a 5-year basis, its stock has risen almost 2.5X.