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Eddy Elfenbein submits: One of the more fascinating companies in the world today is Cognizant Technology Solutions (NASDAQ:CTSH). The company, along with Wipro (NYSE:WIT) and Infosys (NYSE:INFY), is one of the foremost names associated with IT outsourcing, particularly to India.

While Cognizant is officially based in lovely Teaneck, NJ, its heart truly lies in the subcontinent. The company currently has over two dozen development centers in India. The growth in this business is simply astounding. The IT/outsourcing sector of the Indian economy is expected to grow from $17.2 billion in 2004 to $50 billion by 2009.

For any company looking to cut costs and have someone else handle their IT problems, Cognizant is great place to go. Half of their business is clients in the financial services sector. In fact, JP MorganChase, one of the scions of Wall Street, is a major client. Another 20% of Cognizant’s business comes from health care companies like UnitedHealth.

Cognizant was spun off from Dun & Bradstreet a few years ago and it hasn’t looked back since. As someone who pores over lots of financial statements, I can tell you that Cognizant’s results are extremely impressive. The company has consistently been able to grow its earnings over 50% a year. That’s no easy trick. Also, the company has a solid balance sheet and its operating margins are often around 20%.

cognizantThe shares have soared from $12 four years ago to $80 today. In fact, the stock just made a new all-time high. The big news recently is that it was added to the S&P 500. Two weeks ago, Cognizant reported third-quarter earnings of 40 cents a share, two cents more than Wall Street was expecting.

For the current quarter, Cognizant expects earnings of 42 cents a share, and that will bring 2006’s total to $1.51 a share (the results are a bit skewed due to the FASB 123R jazz).

What about next year? The Street is all over the place. The consensus is currently looking for $2.04 a share, which means that Cognizant is going for about 40 times forward earnings. That’s even pricier than Google.

Here’s a spreadsheet with all of Cognizant’s stats from its income statement going back a few years. If you’re new to investing, this might be worth looking over. I know it might appear as a jumble of numbers, but as far as income statements go, it doesn’t get much better.

Here's a stock chart of CTSH with its earnings in the gold line (right scale). When the lines cross, that means the trailing p/e ratio is 50:

cognizant

In early 2002, Cognizant's p/e ratio was roughly the same as the S&P 500. Today. it's over three times the S&P 500.

cognizant