Why Is Cognizant (CTSH) Up 1.8% Since Last Earnings Report?

A month has gone by since the last earnings report for Cognizant (CTSH). Shares have added about 1.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cognizant due for a pullback? Well, first let's take a quick look at its 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 Q1 Earnings Beat Estimates, Revenues Up Y/Y

Cognizant Technology Solutions posted adjusted earnings of $1.40 per share for the first quarter of 2026, up 13.8% year over year and surpassing the Zacks Consensus Estimate by 5.01%.

Revenues of $5.41 billion increased 5.8% from the year-ago quarter but missed the consensus mark by 0.02%. Trailing 12-month bookings of $29.6 billion rose 11% year over year and supported a book-to-bill of roughly 1.4x, reflecting 21% bookings growth in the quarter.

CTSH’s Segmental Details

Financial Services revenues of $1.64 billion rose 12.4% year over year (up 10.2% at constant currency). Management tied the strength to demand across banking and insurance clients as large-deal ramps continued to support growth.

Health Sciences revenues were $1.58 billion, up 0.5% year over year (down 0.9% at constant currency), while Products and Resources revenues climbed 3.4% year over year to $1.32 billion (up 1.1% at constant currency), and Communications, Media and Technology rose 8.1% year over year to $869 million (up 6.5% at constant currency).

Cognizant’s Regional Trends Highlight Europe's Strength

North America remained the core revenue engine, generating $4.05 billion (74.9% of total), up 5.1% year over year and 4.9% in constant currency. The company attributed growth to large-deal ramp activity and demand for AI and analytics services tied to readiness and innovation budgets.

Europe stood out on a reported basis. Total Europe revenue increased 9.4% year over year to $1.04 billion, though constant-currency growth was modest at 0.6%. Within Europe, the United Kingdom delivered $509 million in revenues, up 11.4% year over year (up 4.6% at constant currency), while Continental Europe revenues of $530 million rose 7.5% (down 3.1% at constant currency). Rest of World revenue was $322 million, up 3.5% year over year (up 1.5% at constant currency).

CTSH’s Operating Details

Selling, general & administrative expenses, as a percentage of revenues, contracted 100 basis points (bps) year over year to 14.6%.

Total headcount at the end of the first quarter was 357,600 compared with 354,600 in the prior quarter. 

Voluntary attrition - Tech Services on a trailing 12-month basis was 12.3% in the first quarter of 2026 compared with 12.3% and 12% for the periods ended Dec. 31, 2025, and March 31, 2026, respectively.

On an adjusted basis, operating margin was 15.6%, reflecting a 10-bps year-over-year improvement despite changes in delivery mix.

CTSH’s Balance Sheet

CTSH had cash and short-term investments of $1.51 billion as of March 31, 2026, compared with $1.91 billion as of Dec. 31, 2025. 

As of March 31, 2026, the company had a total debt of $568 million, down from $576 billion reported as of Dec. 31, 2025.

Operating cash flow was $274 million in the quarter, and free cash flow was $198 million, consistent with typical first-quarter seasonality and impacted by a larger bonus payout. The company returned capital through both repurchases and dividends, including 6.3 million shares bought back for $427 million during the quarter.

Cognizant declared a quarterly cash dividend of $0.33 per share for shareholders of record on May 18, 2026, payable May 27, 2026, and had $1.5 billion remaining under its repurchase authorization as of March 31, 2026.

CTSH Outlook Improves With Project Leap in Focus

For the second quarter of 2026, Cognizant expects revenues in the range of $5.45-$5.52 billion, implying year-over-year growth of 3.8%-5.3% (3.2%-4.7% at constant currency). For 2026, the company expects revenues in the range of $22.11-$22.64 billion, maintaining its constant-currency growth view of 4.0%-6.5%.

Profitability guidance moved higher as Project Leap takes shape. Management raised full-year 2026 adjusted operating margin guidance to 16.0%-16.2%, and reaffirmed adjusted earnings guidance of $5.63-$5.77 per share. Project Leap is expected to generate in-year savings of approximately $200-$300 million in 2026, while the company anticipates recording $230-$320 million of costs, with substantially all incurred in 2026.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Cognizant has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, 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 Player

Cognizant is part of the Zacks Computers - IT Services industry. Over the past month, Fair Isaac (FICO), a stock from the same industry, has gained 26.5%. The company reported its results for the quarter ended March 2026 more than a month ago.

Fair Isaac reported revenues of $691.68 million in the last reported quarter, representing a year-over-year change of +38.7%. EPS of $12.50 for the same period compares with $7.81 a year ago.

Fair Isaac is expected to post earnings of $12.05 per share for the current quarter, representing a year-over-year change of +40.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.

Fair Isaac has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.

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