NasdaqGS:CTSH

Stock Analysis Report

Cognizant Technology Solutions

Executive Summary

Cognizant Technology Solutions Corporation, a professional services company, provides consulting and technology, and outsourcing services worldwide.

Rewards

Trading at 14.3% below its fair value

Earnings are forecast to grow 9.75% per year

Risk Analysis

No risks detected for CTSH from our risk checks.


Snowflake Analysis

Flawless balance sheet and fair value.


Similar Companies

Share Price & News

How has Cognizant Technology Solutions's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CTSH has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.4%

CTSH

-0.8%

US IT

-1.1%

US Market


1 Year Return

-3.2%

CTSH

34.8%

US IT

17.9%

US Market

Return vs Industry: CTSH underperformed the US IT industry which returned 34.8% over the past year.

Return vs Market: CTSH underperformed the US Market which returned 17.9% over the past year.


Shareholder returns

CTSHIndustryMarket
7 Day2.4%-0.8%-1.1%
30 Day12.3%3.3%1.4%
90 Day10.6%13.0%6.9%
1 Year-1.9%-3.2%36.2%34.8%20.3%17.9%
3 Year21.7%17.8%107.0%98.1%47.8%38.3%
5 Year15.9%12.2%148.0%125.8%71.9%53.0%

Price Volatility Vs. Market

How volatile is Cognizant Technology Solutions's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Cognizant Technology Solutions undervalued compared to its fair value and its price relative to the market?

14.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CTSH ($70.09) is trading below our estimate of fair value ($81.76)

Significantly Below Fair Value: CTSH is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: CTSH is good value based on its PE Ratio (21.3x) compared to the IT industry average (31.4x).

PE vs Market: CTSH is poor value based on its PE Ratio (21.3x) compared to the US market (18.2x).


Price to Earnings Growth Ratio

PEG Ratio: CTSH is poor value based on its PEG Ratio (2.2x)


Price to Book Ratio

PB vs Industry: CTSH is good value based on its PB Ratio (3.5x) compared to the US IT industry average (4.2x).


Next Steps

Future Growth

How is Cognizant Technology Solutions forecast to perform in the next 1 to 3 years based on estimates from 30 analysts?

9.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CTSH's forecast earnings growth (9.7% per year) is above the savings rate (1.7%).

Earnings vs Market: CTSH's earnings (9.7% per year) are forecast to grow slower than the US market (14.1% per year).

High Growth Earnings: CTSH's earnings are forecast to grow, but not significantly.

Revenue vs Market: CTSH's revenue (4.3% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: CTSH's revenue (4.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CTSH's Return on Equity is forecast to be low in 3 years time (18.7%).


Next Steps

Past Performance

How has Cognizant Technology Solutions performed over the past 5 years?

5.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CTSH has high quality earnings.

Growing Profit Margin: CTSH's current net profit margins (11%) are lower than last year (13%).


Past Earnings Growth Analysis

Earnings Trend: CTSH's earnings have grown by 5.7% per year over the past 5 years.

Accelerating Growth: CTSH's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: CTSH had negative earnings growth (-12.3%) over the past year, making it difficult to compare to the IT industry average (12%).


Return on Equity

High ROE: CTSH's Return on Equity (16.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Cognizant Technology Solutions's financial position?


Financial Position Analysis

Short Term Liabilities: CTSH's short term assets ($7.6B) exceed its short term liabilities ($3.0B).

Long Term Liabilities: CTSH's short term assets ($7.6B) exceed its long term liabilities ($2.2B).


Debt to Equity History and Analysis

Debt Level: CTSH's debt to equity ratio (6.7%) is considered satisfactory.

Reducing Debt: CTSH's debt to equity ratio has reduced from 21.1% to 6.7% over the past 5 years.

Debt Coverage: CTSH's debt is well covered by operating cash flow (338.6%).

Interest Coverage: CTSH earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: CTSH has a low level of unsold assets or inventory.

Debt Coverage by Assets: CTSH's debt is covered by short term assets (assets are 10.3x debt).


Next Steps

Dividend

What is Cognizant Technology Solutions's current dividend yield, its reliability and sustainability?

1.26%

Current Dividend Yield


Dividend Yield vs Market

company1.3%marketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Years1.6%

Current dividend yield vs market & industry

Notable Dividend: CTSH's dividend (1.26%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.45%).

High Dividend: CTSH's dividend (1.26%) is low compared to the top 25% of dividend payers in the US market (3.73%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, CTSH has been paying a dividend for less than 10 years.

Growing Dividend: CTSH's dividend payments have increased, but the company has only paid a dividend for 3 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (24.3%), CTSH's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CTSH's dividends in 3 years are forecast to be well covered by earnings (27.2% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.1yrs

Average management tenure


CEO

Brian Humphries (45yo)

0.8yrs

Tenure

0

Mr. Brian Humphries has been Chief Executive Officer and Director of Cognizant Technology Solutions Corporation since April 1, 2019. Mr. Humphries served as the Chief Executive Officer of Vodafone Business ...


Leadership Team

NamePositionTenureCompensationOwnership
Karen McLoughlin
Chief Financial Officer8yrsUS$5.52m0.012% $4.6m
Malcolm Frank
Executive VP & President of Cognizant Digital Business0.8yrsUS$4.68m0.0063% $2.4m
Dharmendra Sinha
Executive VP & President of North America6.2yrsUS$3.16m0.011% $4.1m
Brian Humphries
CEO & Director0.8yrsno data0.0046% $1.8m
Srinivasan Veeraraghavachary
Executive VP & Chief Operating Officer3.5yrsno data0.0090% $3.4m
Robert Telesmanic
Senior VP3.1yrsno data0.0024% $911.4k
Katie Royce
Global Head of Investor Relations0yrsno datano data
Matthew Friedrich
Executive VP2.8yrsUS$6.98mno data
Rick Lacroix
Vice President of Corporate Communications0yrsno datano data
Larry Bridge
Senior VP of Healthcare Strategy & Corporate Development0yrsno datano data

3.1yrs

Average Tenure

52yo

Average Age

Experienced Management: CTSH's management team is considered experienced (3.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Brian Humphries
CEO & Director0.8yrsno data0.0046% $1.8m
Francisco D'Souza
Executive Vice Chairman1.7yrsUS$14.09m0.034% $13.2m
John Klein
Independent Director21.9yrsUS$478.48k0.099% $38.0m
John Fox
Independent Director12.2yrsUS$331.48k0.0064% $2.4m
Joseph Velli
Independent Director2.2yrsUS$311.98k0.0012% $465.3k
Michael Patsalos-Fox
Independent Chairman1.4yrsUS$443.10k0.0081% $3.1m
Leo Mackay
Independent Director7.4yrsUS$311.98k0.0023% $896.0k
Maureen Breakiron-Evans
Independent Director10.8yrsUS$344.48k0.00056% $215.3k
John Dineen
Independent Director2.8yrsUS$324.42kno data
Zein Abdalla
Independent Director4.4yrsUS$326.96k0.0011% $438.4k

3.6yrs

Average Tenure

60.5yo

Average Age

Experienced Board: CTSH's board of directors are considered experienced (3.6 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Cognizant Technology Solutions Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Cognizant Technology Solutions Corporation
  • Ticker: CTSH
  • Exchange: NasdaqGS
  • Founded: 1994
  • Industry: IT Consulting and Other Services
  • Sector: Software
  • Market Cap: US$38.454b
  • Shares outstanding: 548.64m
  • Website: https://www.cognizant.com

Number of Employees


Location

  • Cognizant Technology Solutions Corporation
  • Glenpointe Centre West
  • 500 Frank West Burr Boulevard
  • Teaneck
  • New Jersey
  • 7666
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CTSHNasdaqGS (Nasdaq Global Select)YesClass A Common StockUSUSDJun 1998
COZDB (Deutsche Boerse AG)YesClass A Common StockDEEURJun 1998
COZXTRA (XETRA Trading Platform)YesClass A Common StockDEEURJun 1998
CTSHSWX (SIX Swiss Exchange)YesClass A Common StockCHCHFJun 1998
0QZ5LSE (London Stock Exchange)YesClass A Common StockGBUSDJun 1998
CTSH *BMV (Bolsa Mexicana de Valores)YesClass A Common StockMXMXNJun 1998
CTSHWBAG (Wiener Boerse AG)YesClass A Common StockATEURJun 1998
COZETLX (Eurotlx)YesClass A Common StockITEURJun 1998
CTSH34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EA REP 1 COM CL'A' USD0.01BRBRLApr 2016

Biography

Cognizant Technology Solutions Corporation, a professional services company, provides consulting and technology, and outsourcing services worldwide. The company operates through four segments: Financial Services; Healthcare; Products and Resources; and Communications, Media and Technology. It offers analytics and artificial intelligence, digital engineering, intelligent process automation, interactive, and hybrid cloud services and solutions; and application development, systems integration, application testing and maintenance, infrastructure, and business process services. The company also develops, licenses, implements, and supports proprietary and third-party software products and platforms for the healthcare industry. In addition, it offers revenue cycle management solutions to the healthcare industry; business advisory and data analytics services; and salesforce services. Further, the company develops custom cloud-based software and platforms; and provides consulting services that enable companies to plan, implement, and optimize automated cloud-based business processes and technologies. It serves banking and insurance, healthcare and life sciences, retail and consumer goods, manufacturing and logistics, travel and hospitality, energy and utilities, communications and media, and technology industries. The company markets and sells its services through professional staff, senior management, and direct sales personnel. Cognizant Technology Solutions Corporation was founded in 1994 and is headquartered in Teaneck, New Jersey. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/23 00:55
End of Day Share Price2020/02/21 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.