Why Is Cognizant (CTSH) Down 4.1% Since Last Earnings Report?

Core Viewpoint - Cognizant Technology Solutions reported strong Q4 2024 earnings, beating estimates and showing year-over-year revenue growth, driven by digital transformation services and AI integration. Financial Performance - Non-GAAP earnings for Q4 2024 were $1.21 per share, exceeding the Zacks Consensus Estimate by 8.04% and increasing 2.5% year over year [2] - Revenues reached $5.08 billion, surpassing the consensus mark by 0.49%, with a year-over-year increase of 6.8% and 6.7% at constant currency [3] - Bookings for the trailing 12 months rose 3% year over year to $27.1 billion, with a book-to-bill ratio of approximately 1.4 times [4] Segment Performance - Financial services revenues (28.2% of total) increased 2.9% year over year to $1.435 billion [5] - Health Sciences revenues (30.3% of total) grew 10.4% year over year to $1.541 billion, driven by strong offerings and large deal wins [6] - Products and Resources revenues (25.5% of total) rose 11.3% year over year to $1.29 billion [7] - Communications, Media and Technology revenues (16% of total) were $811 million, up 0.9% year over year [7] Geographic Performance - North America revenues increased 8.3% year over year, contributing 75.2% to total revenues [7] - Europe revenues grew 2.3% year over year, contributing 18.5% to total revenues, while the U.K. saw a decline of 0.7% [8] Operating Metrics - GAAP operating margin was 14.8%, down 40 basis points year over year, impacted by $49 million in NextGen program costs [10] - Non-GAAP operating margin was 15.7%, contracting 30 basis points year over year [10] Balance Sheet - Cash and short-term investments totaled $2.24 billion as of December 31, 2024, up from $2.02 billion [11] - Total debt decreased to $908 million from $1.2 billion [11] - Free cash flow was $837 million, compared to $791 million in the previous quarter [11] Guidance - For Q1 2025, revenues are expected between $5 billion and $5.1 billion, indicating growth of 5.6%-7.1% [12] - Full-year 2025 revenue guidance is set at $20.3-$20.8 billion, reflecting an increase of 2.6-5.1% [12] - Adjusted earnings per share for 2025 are projected between $4.90 and $5.06 [13] Market Sentiment - There has been an upward trend in estimates revision for Cognizant over the past month [14] - The stock has an aggregate VGM Score of B, indicating a favorable position in the investment strategy [15] - Cognizant holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [16]