Cognizant Technology Solutions Corp - Class A
Exchange: NASDAQSector: TechnologyIndustry: Information Technology Services
Cognizant Technology Solutions Corporation (Cognizant) is a provider of custom information technology, consulting and business process outsourcing services. The Company is engaged in Business, Process, Operations and Information Technology Consulting, Application Development and Systems Integration, Enterprise Information Management (EIM), Application Testing, Application Maintenance, Information Technology Infrastructure Services, and Business and Knowledge Process Outsourcing, or BPO and KPO. The Company operates in four segments: Financial Services; Healthcare; Manufacturing, Retail and Logistics, and Other, which includes communications, information, media and entertainment, and high technology. In October 2013, Cognizant Technology Solutions of India acquired Equinox Consulting SAS.
Current Price
$51.30
+0.83%GoodMoat Value
$134.76
162.7% undervaluedProfile
Valuation (TTM)
Market Cap$24.53B
P/E11.01
EV$29.13B
P/B1.63
Shares Out478.25M
P/Sales1.15
Revenue$21.41B
EV/EBITDA5.93
Cognizant Technology Solutions Corp - Class A (CTSH) Stock Analysis
GoodMoat Analysis
Cognizant Technology Solutions appears to be a financially stable IT services firm with a modest moat, trading at a significant discount to the platform's target price. The business shows adequate quality but lacks the high-growth, high-moat profile typical of a standout value compounder. Further investigation is warranted to understand the drivers of the valuation gap and the durability of its competitive position.
Read full analysis
Cognizant Technology Solutions is a global provider of information technology, consulting, and business process services. Applying the GoodMoat framework, the company's moat is likely modest. It may score points for switching costs (mission-critical services with high migration costs), scale privilege, and niche dominance in certain verticals, but it lacks the strong network effects, proprietary data, or technology leadership that define a wide moat. The business quality is adequate, supported by a solid ROE of 14.9%, a strong free cash flow yield of 9.2%, and a very conservative balance sheet with a low debt/equity ratio of 0.08. However, its low single-digit revenue growth of 4.9% YoY and an operating margin of 16.1% suggest it is a mature, stable operator rather than a high-growth compounder. The valuation is the most compelling aspect, with a P/E of 12.9 and a GoodMoat Target of $130.43, implying a substantial margin of safety. According to the Decision Framework, a company with an adequate moat and quality profile can proceed to valuation analysis, where such a large discount would be considered favourable. The key question for a value investor is whether this discount reflects a temporary headwind or a permanent impairment of the business model, requiring deeper due diligence on its competitive positioning and growth drivers. Analysis based on data as of 2024-05-15.
Market Cap$24.53B
Current Price$51.30
P/E Ratio11.01
Forward P/E—
PEG Ratio2.95
EPS$4.56
Book Value$31.40
P/B Ratio1.63
CTSH Financial Charts
FCF vs CAPEX
FCFCAPEX
Forward estimates use 4.0% FCF growth (CAGR)
Cash vs Debt
Net Cash: 749M
Revenue
16.8B
FY19
16.7B
FY20
18.5B
FY21
19.4B
FY22
19.4B
FY23
19.7B
FY24
21.1B
FY25
Net Income
1.8B
FY19
1.4B
FY20
2.1B
FY21
2.3B
FY22
2.1B
FY23
2.2B
FY24
2.2B
FY25
CTSH 52-Week Range
$45.68
$85.72
50-Day MA: $56.69200-Day MA: $68.62
Did you know?
Free cash flow has been growing at 4.0% annually.
Cognizant Technology Solutions Corp - Class A (CTSH) Financial Summary
Cognizant Technology Solutions Corp - Class A (CTSH) is a Technology company in the Information Technology Services industry, listed on NASDAQ. The stock currently trades at $51.30 with a market capitalization of $24.53B.
Key valuation metrics include a P/E ratio of 11.01, price-to-book ratio of 1.63, and EPS of $4.56. The company reports a profit margin of 10.4% and return on equity of 14.8%.
CTSH Key Financial Metrics
| Metric | Value |
|---|---|
| Market Cap | $24.53B |
| P/E Ratio | 11.01 |
| EPS | $4.56 |
| P/B Ratio | 1.63 |
| P/S Ratio | 1.15 |
| EV/EBITDA | 5.93 |
| Dividend Yield | 2.49% |
| Profit Margin | 10.4% |
| Return on Equity | 14.8% |
| Debt/Equity | 0.08 |
CTSH Revenue & Earnings History
| Year | Revenue | Net Income |
|---|---|---|
| FY19 | $16.78B | $1.84B |
| FY20 | $16.65B | $1.39B |
| FY21 | $18.51B | $2.14B |
| FY22 | $19.43B | $2.29B |
| FY23 | $19.35B | $2.13B |
| FY24 | $19.74B | $2.24B |
| FY25 | $21.11B | $2.23B |
Cognizant Technology Solutions Corp - Class A (CTSH) Valuation
Based on GoodMoat's DCF model, Cognizant Technology Solutions Corp - Class A has a fair value estimate of $134.76. At the current price of $51.30, the stock appears 61.9% undervalued relative to our intrinsic value estimate.
CTSH Quality Indicators
Cognizant Technology Solutions Corp - Class A maintains a profit margin of 10.4% and an operating margin of 16.1%. Return on equity stands at 14.8%. The current ratio is 2.14. Debt-to-equity ratio is 0.08.
About Cognizant Technology Solutions Corp - Class A
Cognizant Technology Solutions Corporation (Cognizant) is a provider of custom information technology, consulting and business process outsourcing services. The Company is engaged in Business, Process, Operations and Information Technology Consulting, Application Development and Systems Integration, Enterprise Information Management (EIM), Application Testing, Application Maintenance, Information Technology Infrastructure Services, and Business and Knowledge Process Outsourcing, or BPO and KPO. The Company operates in four segments: Financial Services; Healthcare; Manufacturing, Retail and Logistics, and Other, which includes communications, information, media and entertainment, and high technology. In October 2013, Cognizant Technology Solutions of India acquired Equinox Consulting SAS.
CTSH Free Cash Flow
Cognizant Technology Solutions Corp - Class A generated $2.67B in trailing twelve-month free cash flow, representing an FCF yield of 10.86%. This strong FCF yield suggests the company generates substantial cash relative to its market value.
CTSH Shares Outstanding
Cognizant Technology Solutions Corp - Class A has 0.48 billion shares outstanding at a share price of $51.30, giving it a market capitalization of $24.53B.
CTSH Recent Insider Trades
Recent insider transactions at Cognizant Technology Solutions Corp - Class A include:
| Insider | Type | Shares | Value |
|---|---|---|---|
| Kerdman Alina (SVP, Controller & CAO) | SELL | 154 | $7398.16 |
| Kerdman Alina (SVP, Controller & CAO) | SELL | 194 | $11890.26 |
| Kerdman Alina (SVP, Controller & CAO) | SELL | 131 | $7962.18 |