The information technology services market has witnessed enormous growth owing to the increasing adoption of cloud computing services, AI, business automation and data analytics in almost every companies. Additionally, hybrid work trends and growing attention to the metaverse should help the industry maintain momentum.
While the past two months have been tough for the tech industry due to the Fed’s hawkish stance in its efforts to combat inflationary pressure, increased digitalization and tech reliance should help the rebound in the economy. IT services industry. The global information technology market is expected to reach $9,325.69 billion in 2022, growing at a steady pace. 11.2% CAGR .
Against this backdrop, we think it might be prudent to bet on fundamentally sound IT services stocks Cognizant Technology Solutions Corporation (CSP), CGI Inc. (GIB) and Jack Henry & Associates, Inc. (JKHY).
Cognizant Technology Solutions Corporation (CSP)
CTSH in Teaneck, NJ, is a professional services firm that provides consulting, technology and outsourcing services internationally. The Company has four operating segments: Financial Services; Health care; products and resources; and communications, media and technology. It also offers customer experience improvement, robotic process automation, analytics, and AI services.
This month, CTSH announced its collaboration with Microsoft to provide a new digital health solution to augment remote patient monitoring for improved medical care. CTSH’s new solution is the first of several planned offerings that integrate remote patient monitoring and virtual health using smartwatches, blood pressure monitors and glucometers to collect and communicate patient health data to providers. Additionally, this new solution is a leveraged component of Microsoft Cloud for Healthcare.
In January, CTSH announced a partnership with Uptake, a pioneer in industrial intelligence software as a service, to enable unified data management for the energy and utility industries. This collaboration combines Uptake Fusion, which collects, moves, organizes and curates data in Microsoft Azure to power advanced industrial analytics and asset performance management with the industrial consulting, systems integration and application services of CTSH.
During the fourth quarter, ended December 31, 2021, CTSH’s revenue increased 14.2% year-over-year to $4.78 billion. Its operating profit rose 57.4% from its value a year ago to $732 million, while net profit rose 82.3% from the prior period to $576 million. millions of dollars. The company’s EPS rose 86.4% year over year to $1.10.
Analysts expect CTSH’s revenue to grow 9.6% year-on-year to $4.82 billion in the first quarter, ending March 31, 2022. The company’s EPS is expected to rise 6. 9% YoY to $1.04 in Q1, ending March. 31, 2022. Also, it has an impressive history of earnings surprises; it has exceeded consensus EPS estimates in each of the past four quarters. Shares of the company have climbed 21.4% over the past year and 33.9% over the past nine months.
CTSH POWR Rankings reflect this promising prospect. The company has an overall rating of B, which translates to Buy in our proprietary rating system. POWR ratings rate stocks on 118 separate factors, each with its own weighting.
The stock also has a B rating for quality. In category A Outsourcing – Technical Services industry, it is ranked #4 out of 11 stocks.
To view additional POWR Ratings for Growth, Sentiment, Stability, Value, and Momentum for CTSH, Click here.
CGI Inc. (GIB)
Based in Montreal, Canada, GIB provides information technology (IT) and business process services. It engages in outsourcing and outsourcing management business, systems integration and consulting software solution sales, and other related activities.
Recently, GIB announced its agreement to acquire shares of Umanis, a digital company specializing in data, digital and business solutions, through its subsidiary CGI France SAS (“CGI France”). Under this agreement, CGI France has the exclusive right to acquire all of the shares held by MURA and Olivier Pouligny, which represent approximately 70.6% of the share capital of Umanis, for 17.15 euros per share.
In the first quarter ended December 31, 2021, GIB’s revenue increased 2.4% year-over-year to C$3.09 billion ($2.46 billion). Its net profit increased by 7% compared to the previous year’s value to reach CAD 367.45 million ($291.87 million), while its adjusted EBIT improved by 5.2% from a year-over-year to reach CAD 521.50 million over the period ($414.23 million). Its EPS rose 12.9% from its value a year ago at $1.49.
The consensus EPS estimate of $1.19 for the second quarter, ending March 31, 2022, represents an 8.4% year-over-year improvement. Analysts expect GIB’s revenue to grow 0.4% year-over-year to $2.51 billion in the second quarter of its fiscal 2022. It beat consensus EPS estimates over the past four quarters.
GIB’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our POWR rating system. The stock also has an A rating for stability and a B for sentiment. Within the Outsourcing – Tech Services industry, it is ranked #5.
In total, we rate GIB on eight different levels. Beyond what we have stated above, we have also assigned GIB ratings for Momentum, Growth, Quality and Value. Get all GIB ratings here.
Jack Henry & Associates, Inc. (JKHY)
JKHY in Monett, Miss., provides technology solutions and payment processing services primarily for financial services organizations in the United States. The four operating segments of JKHY are Core; Payments; Additoinal; and Business and others. It also offers information and transaction processing solutions under the Jack Henry Banking brand and basic data processing solutions under the Symitar brand.
Last month, JKHY announced a next-generation cloud-native technology strategy that is expected to enable community and regional financial institutions to innovate faster and compete, while meeting the changing needs of their account holders. This strategy focuses on the company’s continued development of a single, modern open banking platform that enables easy access to a broad ecosystem of high-quality Jack Henry and third-party fintech solutions.
Also last month, JKHY announced that Planters First Bank launched Jack Henry’s capabilities to innovate and deliver competitive services that differentiate it from megabanks and big tech and support its vision to be the best community bank for Central Georgia. . Planters First Bank has dramatically improved productivity and efficiency without adding resources by introducing Jack Henry’s capabilities to its customers.
In the second quarter, ending December 31, 2021, JKHY’s non-GAAP revenue increased 11.1% year-on-year to $466.90 million. It is not GAAP compliant operating result rose 13% from its value a year ago to $101.33 million, while its net profit rose 33% from the prior period to $95.67 million. The company’s EPS rose 38.3% year-over-year to $1.30.
Analysts expect JKHY’s revenue to grow 9.6% year-over-year to $475.52 million in the third quarter (ending March 2022). The consensus EPS estimate of $1.06 for the third quarter indicates an 11.8% year-over-year improvement. Additionally, the company has an impressive track record of earnings surprises; it has exceeded consensus EPS estimates in each of the past four quarters.
The stock has gained 25.9% in price over the past year and 13.3% over the past nine months.
It’s no surprise that JKHY has an overall rating of B, which equates to Buy in our POWR rating system. JKHY has a B rating for quality and growth. Within the Financial Services (Corporate) industry, it is ranked No. 13 out of 112 stocks.
Click here to see additional POWR ratings for JKHY (stability, value, sentiment and momentum).
Shares of CTSH were trading at $91.05 per share on Wednesday afternoon, down $2.07 (-2.22%). Year-to-date, the CTSH has gained 2.94%, versus a -6.15% rise in the benchmark S&P 500 over the same period.
About the Author: Spandan Khandelwal
Spandan’s is a financial journalist and investment analyst specializing in the stock market. Through its ability to interpret financial data, it aims to help investors assess a company’s fundamentals before investing. After…