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Here's Why Cognizant Stock Jumped 10% Today

By Anders Bylund - Feb 6, 2020 at 5:07PM

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The IT services giant edged out Wall Street's expectations in last night's fourth-quarter earnings report.

What happened

Shares of Cognizant Technology Solutions (CTSH -6.50%) rose 9.9% on Thursday, boosted by a strong earnings report.

So what

The massive provider of IT services and consulting programs posted fourth-quarter sales of $4.3 billion, 4% above the year-ago period's reading. Adjusted earnings fell 5% to $1.07 per share. Your average Wall Street analyst would have settled for earnings near $1.04 per share on revenue in the vicinity of $4.23 billion.

Two young professionals smile at each other over a shared laptop computer.

Consultants consulting. Image source: Getty Images.

Now what

Cognizant's financial surprises sprung from solid growth in two of the company's reporting segments. Sales rose 8% year over year in the communications, media, and technology division, driven by high interest in converting existing business systems into cloud-based services. The products and resources group saw 9% higher revenue, also fueled mainly by high demand for cloud computing assistance.

The stock is now trading near its 52-week highs, recovering from a steep drop nine months ago. There's also room for further gains since Cognizant is trading at a very reasonable 18 times trailing earnings.

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Cognizant Technology Solutions Corporation Stock Quote
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$70.23 (-6.50%) $-4.88

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