Valens Equity Weekly Insights - 2024 01 16
Cognizant has been one of the best consulting firms globally by leveraging its asset-based consulting strategies. Incrementally, CTSH has been able to consistently reinvest in its business to drive further growth through both bolt-on acquisitions and internal R&D. It has been both disrupting and consolidating the industry to produce impressive growth and profitability. If the company is able to continue executing, it should be able to beat market expectations.Cognizant's management is closely aligned to focus on profitable growth, suggesting the market's expectations for declining growth and margins are unwarranted.
Management confidence in the Q3 earnings call about improving customer retention and ability to leverage technology to improve operations suggest management is positioned to execute above market expectations.
CTSH
Cognizant Technology Solutions is a services company, transforming customers' business, operating and technology models for the digital era. The company's services include digital services and solutions, consulting, application development, systems integration, application testing, application maintenance, infrastructure services and business process services. Additionally, the company develops, licenses, implements and supports proprietary and third-party software products and platforms. The company has organized its services and solutions into four practice areas: Digital Business, Digital Operations, Digital Systems and Technology and Consulting.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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