Cognizant (NASDQ: CTSH) reported its Q1 FY20 earnings on Thursday. Cognizant (NASDAQ: CTSH) is trying to emerge from the crisis in a position of strength and executed quite well in this quarter. As per the financial results of the company the revenue marked up to $4.2 billion i.e. there was an overall 2.8% increase in the revenue if compared to the quarter year ago.
There are four reportable segments of the company which include:-
- Financial Services which consist of banking and insurance operating segments. These financial services reside 34.3% of the revenues and thus there was a 1% growth in the revenue every year. The growth in the operating segments was driven by the partnership of the company with three Finnish financial institutions which was announced earlier so as to operate and alter the regional banks and core banking platform further balanced by the company’s largest clients.
- Healthcare which consist of life sciences and healthcare operating segments contributing 28.3% of the overall revenues which grew 2.7% every year. There was a double digit growth in this operating segment which duly includes the input of Zenith technologies which was acquired by the company last year.
- Products and services which consist of various operating segments namely retail and consumer goods, manufacturing, logistics, travel, hospitality etc. The growth his segment contribute up to 22.6% of revenue which grew by 4.4% every year.
- Communication, media and technology operating segment which contribute around 14.8% to the revenue and grew 5.2% every year. The growth in this segment is more in comparison to other segments.
Thus company was able to strengthen its financial flexibility in the first quarter of the current year.Even during this covid-19 situation the company has taken various measures to maintain the safety and health of their employees by enabling the shift to work from home and wisely managing the clients of the company.
With the arise of this pandemic crisis the need to modernize the work and switch for cloud workloads has increased and company is helping its clients by using a combination of data modeling and human intelligence so as to uncover insights which will help the clients to adapt as per their wants at low cost and high speed.
(Source: Business Quant)
Operating profit of the company has increased in this quarter i.e. $1153 mn. in comparison to the operating profit of the company which was $1145 mn. last year.
In compliance to the dividend the company has declared a quarterly dividend of $0.22 per share which shows that there was 10% i.e. $ 0.02 increase in the current cash dividends in comparison to last year dividends.
This quarter in the profitability index the company has recorded gross margin of 35.80% and EBITDA margin of 16.50%.As per the current valuation of the company the price to earnings ratio stands at 18.8 whereas price to book value is 2.8 which shows that the company has earned well in quarter.
Thus in compliance to the financial results, company has performed well in this quarter. The company expects effect of covid-19 crisis to negatively impact the cash flows, operations and financial position of the company. Also during this crisis the company has incurred $6 million in response to the Covid-19 situation which duly involves bonus for the employees. Also there was negative impact on various operating segments like media , technology, consumer goods and retail at this time of covid-19.
As per my perspective the company has performed well in this quarter and showed positive results in comparison to previous quarter. The company is able to deliver and design products and experiences as per the needs and wants of its customers. Cognizant is helping its clients to innovate and modernize its platforms which are the heart of the businesses through methods that will make the offerings of the businesses faster, smarter and more capable every day.
To conclude we can pinpoint that the revenue and profits of the company has increased in this quarter with a rise in the dividend as well. Also the company has taken various steps in this pandemic crisis for the safety of its employees and is focused towards serving its clients in the most prominent manner. Also there was a rise in the dividend distributed by the company which shows that it could be a good option for the investors and this stock could prove be a good play in the market.
Thus “when a company is more cognizant, it knows more, so it can do more—for its customers, employees and owners. It’s literally built to stay ahead of what’s ahead”