Earnings from Cognizant and Wabtec

We got two more Buy List earnings reports this morning. First up is Cognizant Technology Solutions (CTSH). For Q3, the IT outsourcer earned $1.19 per share. That beat estimates by six cents per share. The company had told us to expect earnings of at least $1.13 per share. Revenue rose 8.3% to $4.88 billion.

“Cognizant delivered strong third-quarter results in three of our four business segments,” said Francisco D’Souza, Chief Executive Officer and Vice Chairman of the Board. “We made continued progress in our shift to digital by building new capabilities and helping our clients excel with digital services and solutions. We’re speeding clients along their journey to create more engaging customer experiences, automate their processes, and modernize their technology foundations, a three-layer transformation we call digital at scale. Our performance this year demonstrates our ability to both invest for growth and achieve our financial targets.”

For Q4, Cognizant sees earnings of at least $1.05 per share, and full-year earnings of at least $4.50 per share. That’s a bit light. The Street had been expecting $1.14 for Q3 and $4.53 for the year. Cognizant expects Q4 revenue between $4.09 billion and $4.13 billion.

“We delivered solid performance in the third quarter as we continued to focus on sustainable revenue growth while increasing margins,” said Karen McLoughlin, Chief Financial Officer. “The strength of our balance sheet allows the company to maintain financial flexibility while driving a substantial return of capital to shareholders.”

The shares are down about 3% this morning.

Also this morning, Wabtec (WAB) said they made 95 cents per share for Q3, which matched estimates. This is a crucial time for WAB with the big merger coming. Frankly, any merger news probably outweighs earnings news at this point.

Wabtec said they now expect full-year 2018 earnings of $3.85 per share which excludes merger costs. The company is aiming for 13% operating margin and $200 million in cash flow.

Raymond T. Betler, Wabtec’s president and chief executive officer, said: “With a solid backlog and positive trends in our markets, we expect to finish the year with a strong fourth quarter, both in earnings and cash flow, to position the company for growth in 2019. Our freight business continues to show strong growth in revenues and income from operations, with good market indicators for the foreseeable future. In transit, we have a near-record backlog and strong bidding activity, as we take actions to drive sustainable profitability improvements in the business. We are making progress toward combining with GE Transportation and are excited about our strategic opportunities to accelerate innovation for our customers, while delivering improved earnings, margins and cash flow for our shareholders.”

The merger with GE Transportation is expected to happen in early 2019. There will be a special shareholder meeting to vote on the deal on November 14.

Posted by on October 30th, 2018 at 8:43 am


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