Cognizant Technology Solutions Corp.
) to beat expectations when it reports second-quarter 2014 results
on Aug 6.
Why a Likely Positive Surprise?
Our proven model shows that Cognizant is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, stands at +5.09%. This
is very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Zacks Rank #2 (Buy)
: Note that stocks with a Zacks Rank #1, 2 and 3 have a
significantly higher chance of beating earnings. The Sell-rated
stocks (#4 and 5) should never be considered going into an earnings
The combination of Cognizant's Zacks Rank #2 and +5.09% ESP
makes us very confident in looking for a positive earnings beat
What is Driving the Better-than-Expected
We believe that Cognizant, which competes with the likes of
), Infosys and Wipro Ltd., remains well diversified in key
verticals and emerging markets of social, mobile, analytics and
cloud, which will continue to boost its top line.
Increasing off-shoring will drive Cognizant's results in the
near term. Cost efficiency amid tight IT spending budget well
positions the company to grow in the near term. However, increasing
headcount may hurt profitability.
Other Stocks to Consider
Cognizant is not the only firm looking up this earnings season.
We also see likely earnings beats coming from these two industry
Super Micro Computer (
), with an Earnings ESP of +2.78% and a Zacks Rank #1 (Strong
Semiconductor Manufacturing International Corp. (
), with an Earnings ESP of +33.33% and a Zacks Rank #2.
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COGNIZANT TECH (CTSH): Free Stock Analysis
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