William Trent1

Cognizant's Growth Begins To Tail Off

Thanks for the correction on the consensus number, but if the consensus includes it they beat by less not more...

Nothing is wrong with growing faster than expected while keeping costs in check. So why didn't the stock rise on the news? I argue that it is because the street is concerned that growth is leveling off. Alternate explanations are, however, welcome.

My EPS "analysis" is simply an extrapolation, not an analysis. It is back-of-envelope stuff. But it does include expected utilization improvements. The thing is, utilization also has a limit and it is something less than 100%. So utilization gains can only continue for a brief time and then it is all up to headcount.

I didn't say there was any evidence, so don't put words in my mouth by including it in quotes. I also didn't even say that I think headcount growth will flatten - I said "many will view this as the signal." My analysis examines the thesis of whether this is the signal and investigates what may happen to the stock if it is.

Feel free to provide your own thesis and analysis thereof, but please try to understand mine before misattributing it.

Visa Cap Issues Offer Excuse for Indian Outsourcing Stocks To Pull Back

Deepak,

Thanks for the insights. There are certainly many pressures acting toward margins - rising wages (in appreciating Rupee) against weaker dollar revenues. Still, they keep managing to grow through it - much to our amazement sometimes.

I think the valuations, the growth and the margin uncertainty all contribute to a general inability to assign a good valuation, which is probably also why the stock will move on "no-news" items like the visa cap.