Why Is Cognizant (CTSH) Down 0.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Cognizant (CTSH). Shares have lost about 0.1% in that time frame, underperforming the S&P 500.But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Cognizant due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Cognizant Technology Solutions Corporation before we dive into how investors and analysts have reacted as of late.Cognizant Q2 Earnings Beat Estimates, Revenues Up Y/YCognizant Technology Solutions reported non-GAAP earnings of $1.31 per share in the second quarter of 2025, which beat the Zacks Consensus Estimate by 3.97% and increased 12% year over year.Revenues of $5.25 billion beat the consensus mark by 1.01%. The top line increased 8.1% year over year and 7.2% at constant currency (cc). This was driven by the Belcan acquisition and strong organic growth, particularly in Health Sciences and Financial Services.The Belcan acquisition significantly contributed to revenue growth, with approximately 400 basis points of inorganic contribution to the overall results.On a trailing 12-month basis, bookings increased 6% year over year to $27.8 billion, which represented a book-to-bill of approximately 1.4 times. Second-quarter bookings included six large deals, including two mega deals valued at around $1 billion each, doubling the total contract value (TCV) of large deals year over year.Cognizant had over 2,500 early Generative AI client engagements in the second quarter of 2025.CTSH’s Top-Line DetailsFinancial services revenues (29.5% of revenues) increased 6.9% year over year (up 6% at cc) to $1.547 billion. Growth is primarily driven by improved discretionary spending and investments in cloud, data modernization, and AI.Health Sciences revenues (29.6% of revenues) increased 6.2% year over year (up 5.3% at cc) to $1.551 billion. Growth is driven by strong demand across payer, provider, and life sciences, which offsets some discretionary spending pressures.Products and Resources revenues (24.9% of revenues) increased 16% year over year (up 14.7% at cc) to $1.306 billion.Communications, Media and Technology revenues (16% of revenues) were $841 million, which increased 3.1% from the year-ago quarter (up 2.2% at cc).Region-wise, revenues from North America increased 8.1% year over year and at constant currency and contributed 74.6% to total revenues.Revenues from Europe increased 9.6% year over year (up 4% at cc) and contributed 19.1% to total revenues. Revenues from the U.K. increased 8.6% year over year (up 3.2% at cc). Continental Europe revenues increased 10.6% year over year (up 4.7% at cc).The Rest of the World revenues increased 4.7% year over year (up 6% at cc) and contributed 6.3% to total revenues.CTSH’s Operating DetailsSelling, general & administrative expenses, as a percentage of revenues, contracted 70 bps year over year to 15.4%.Total headcount at the end of the second quarter was 343,800 compared with 336,300 in the previous quarter. Voluntary attrition - Tech Services on a trailing 12-month basis was 15.2% in the second quarter of 2025 compared with 15.8% and 13.6% in the first and second quarters of 2024, respectively.Cognizant reported a GAAP operating margin of 15.6%, expanding 100 bps on a year-over-year basis.Non-GAAP operating margin (adjusted for NextGen charges) of 15.6% expanded 40 bps year over year.CTSH’s Balance SheetCTSH had cash and short-term investments of $1.80 billion as of June 30, 2025, compared with $1.99 billion as of March 31, 2025. As of June 30, 2025, the company had a total debt of $592 million, down from $600 billion reported as of March 31, 2025.The company generated $398 million in cash from operations compared with $400 million in the previous quarter.Free cash flow was $331 million compared with $393 million reported in the prior quarter.CTSH Initiates Strong Q3 & 2025 GuidanceCognizant expects third-quarter 2025 revenues between $5.27 billion and $5.35 billion, indicating growth of 4.6%-6.1% and an increase of 3.5%-5% on a cc basis. For 2025, revenues are expected to be in the range of $20.7-$21.1 billion, an increase of 4.7-6.7% on a reported basis and growth of 4%-6% on a cc basis. Adjusted operating margin for 2025 is expected to be approximately 15.5% to 15.7% (an increase of 20 to 40 basis points).Adjusted earnings per share for 2025 are expected to be between $5.08 and $5.22.How Have Estimates Been Moving Since Then?It turns out, estimates review have trended upward during the past month.VGM ScoresAt this time, Cognizant has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock has a score of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Cognizant has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerCognizant belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Infosys (INFY), has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2025.Infosys reported revenues of $4.94 billion in the last reported quarter, representing a year-over-year change of +4.8%. EPS of $0.19 for the same period compares with $0.18 a year ago.Infosys is expected to post earnings of $0.20 per share for the current quarter, representing a year-over-year change of +5.3%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Infosys. Also, the stock has a VGM Score of A.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cognizant Technology Solutions Corporation (CTSH): Free Stock Analysis Report American Noble Gas Inc. (INFY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks