COGNIZANT TECH SOLUTIONS-A (CTSH) Stock Fundamental Analysis
USA - NASDAQ:CTSH - US1924461023 - Common Stock
70.26 USD
+0.23 (+0.33%)
70.26 USD
0 (0%)
We assign a fundamental rating of 7 out of 10 to CTSH. CTSH was compared to 86 industry peers in the IT Services industry. CTSH scores excellent points on both the profitability and health parts. This is a solid base for a good stock. CTSH is not valued too expensively and it also shows a decent growth rate. These ratings could make CTSH a good candidate for quality investing.
1. Profitability
1.1 Basic Checks
In the past year CTSH was profitable.
CTSH had a positive operating cash flow in the past year.
CTSH had positive earnings in each of the past 5 years.
CTSH had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 12.08%, CTSH belongs to the best of the industry, outperforming 90.70% of the companies in the same industry.
CTSH's Return On Equity of 15.93% is fine compared to the rest of the industry. CTSH outperforms 77.91% of its industry peers.
With an excellent Return On Invested Capital value of 14.18%, CTSH belongs to the best of the industry, outperforming 87.21% of the companies in the same industry.
CTSH had an Average Return On Invested Capital over the past 3 years of 14.72%. This is significantly below the industry average of 21.82%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.08% | ||
| ROE | 15.93% | ||
| ROIC | 14.18% |
ROA(3y)11.85%
ROA(5y)11.15%
ROE(3y)16.74%
ROE(5y)16.18%
ROIC(3y)14.72%
ROIC(5y)14.56%
1.3 Margins
The Profit Margin of CTSH (11.89%) is better than 83.72% of its industry peers.
In the last couple of years the Profit Margin of CTSH has remained more or less at the same level.
Looking at the Operating Margin, with a value of 15.52%, CTSH belongs to the top of the industry, outperforming 82.56% of the companies in the same industry.
In the last couple of years the Operating Margin of CTSH has remained more or less at the same level.
The Gross Margin of CTSH (34.18%) is comparable to the rest of the industry.
CTSH's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.52% | ||
| PM (TTM) | 11.89% | ||
| GM | 34.18% |
OM growth 3Y-0.1%
OM growth 5Y-0.74%
PM growth 3Y-0.57%
PM growth 5Y0.67%
GM growth 3Y-2.71%
GM growth 5Y-1.29%
2. Health
2.1 Basic Checks
CTSH has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
Compared to 1 year ago, CTSH has less shares outstanding
The number of shares outstanding for CTSH has been reduced compared to 5 years ago.
The debt/assets ratio for CTSH is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 7.08 indicates that CTSH is not in any danger for bankruptcy at the moment.
CTSH has a better Altman-Z score (7.08) than 83.72% of its industry peers.
CTSH has a debt to FCF ratio of 0.26. This is a very positive value and a sign of high solvency as it would only need 0.26 years to pay back of all of its debts.
CTSH's Debt to FCF ratio of 0.26 is amongst the best of the industry. CTSH outperforms 89.53% of its industry peers.
A Debt/Equity ratio of 0.04 indicates that CTSH is not too dependend on debt financing.
CTSH has a better Debt to Equity ratio (0.04) than 75.58% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.04 | ||
| Debt/FCF | 0.26 | ||
| Altman-Z | 7.08 |
ROIC/WACC1.56
WACC9.12%
2.3 Liquidity
A Current Ratio of 2.41 indicates that CTSH has no problem at all paying its short term obligations.
CTSH has a Current ratio of 2.41. This is in the better half of the industry: CTSH outperforms 73.26% of its industry peers.
A Quick Ratio of 2.41 indicates that CTSH has no problem at all paying its short term obligations.
CTSH has a Quick ratio of 2.41. This is in the better half of the industry: CTSH outperforms 73.26% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.41 | ||
| Quick Ratio | 2.41 |
3. Growth
3.1 Past
CTSH shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.99%.
The Earnings Per Share has been growing slightly by 3.50% on average over the past years.
CTSH shows a small growth in Revenue. In the last year, the Revenue has grown by 6.34%.
CTSH shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.29% yearly.
EPS 1Y (TTM)7.99%
EPS 3Y4.86%
EPS 5Y3.5%
EPS Q2Q%11.97%
Revenue 1Y (TTM)6.34%
Revenue growth 3Y2.17%
Revenue growth 5Y3.29%
Sales Q2Q%8.14%
3.2 Future
Based on estimates for the next years, CTSH will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.47% on average per year.
The Revenue is expected to grow by 5.30% on average over the next years.
EPS Next Y9.8%
EPS Next 2Y9.1%
EPS Next 3Y9.12%
EPS Next 5Y9.47%
Revenue Next Year6.19%
Revenue Next 2Y5.45%
Revenue Next 3Y5.71%
Revenue Next 5Y5.3%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
CTSH is valuated correctly with a Price/Earnings ratio of 14.05.
Based on the Price/Earnings ratio, CTSH is valued cheaper than 81.40% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.41, CTSH is valued a bit cheaper.
The Price/Forward Earnings ratio is 12.43, which indicates a correct valuation of CTSH.
Compared to the rest of the industry, the Price/Forward Earnings ratio of CTSH indicates a rather cheap valuation: CTSH is cheaper than 83.72% of the companies listed in the same industry.
CTSH is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.88, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.05 | ||
| Fwd PE | 12.43 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CTSH indicates a rather cheap valuation: CTSH is cheaper than 84.88% of the companies listed in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of CTSH indicates a rather cheap valuation: CTSH is cheaper than 81.40% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 15.04 | ||
| EV/EBITDA | 8.87 |
4.3 Compensation for Growth
CTSH's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of CTSH may justify a higher PE ratio.
PEG (NY)1.43
PEG (5Y)4.02
EPS Next 2Y9.1%
EPS Next 3Y9.12%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.76%, CTSH has a reasonable but not impressive dividend return.
CTSH's Dividend Yield is rather good when compared to the industry average which is at 2.36. CTSH pays more dividend than 88.37% of the companies in the same industry.
CTSH's Dividend Yield is slightly below the S&P500 average, which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.76% |
5.2 History
On average, the dividend of CTSH grows each year by 8.46%, which is quite nice.
CTSH has been paying a dividend for over 5 years, so it has already some track record.
As CTSH did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)8.46%
Div Incr Years5
Div Non Decr Years7
5.3 Sustainability
CTSH pays out 24.92% of its income as dividend. This is a sustainable payout ratio.
The dividend of CTSH is growing around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP24.92%
EPS Next 2Y9.1%
EPS Next 3Y9.12%
70.26
+0.23 (+0.33%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners102.9%
Inst Owner Change-0.67%
Ins Owners0.1%
Ins Owner Change1.42%
Market Cap34.31B
Analysts70.63
Price Target88.55 (26.03%)
Short Float %5.15%
Short Ratio6.51
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.76% |
Yearly Dividend1.21
Dividend Growth(5Y)8.46%
DP24.92%
Div Incr Years5
Div Non Decr Years7
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)1.25%
Min EPS beat(2)0.64%
Max EPS beat(2)1.85%
EPS beat(4)4
Avg EPS beat(4)3.77%
Min EPS beat(4)0.64%
Max EPS beat(4)6.84%
EPS beat(8)7
Avg EPS beat(8)4.16%
EPS beat(12)9
Avg EPS beat(12)3.54%
EPS beat(16)12
Avg EPS beat(16)3.16%
Revenue beat(2)0
Avg Revenue beat(2)-1.35%
Min Revenue beat(2)-1.82%
Max Revenue beat(2)-0.87%
Revenue beat(4)0
Avg Revenue beat(4)-1.37%
Min Revenue beat(4)-1.82%
Max Revenue beat(4)-0.87%
Revenue beat(8)0
Avg Revenue beat(8)-1.47%
Revenue beat(12)0
Avg Revenue beat(12)-1.55%
Revenue beat(16)0
Avg Revenue beat(16)-1.63%
PT rev (1m)-0.76%
PT rev (3m)0.03%
EPS NQ rev (1m)0.05%
EPS NQ rev (3m)2.04%
EPS NY rev (1m)0.69%
EPS NY rev (3m)0.86%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.78%
Revenue NY rev (1m)0.58%
Revenue NY rev (3m)0.67%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.05 | ||
| Fwd PE | 12.43 | ||
| P/S | 1.68 | ||
| P/FCF | 15.04 | ||
| P/OCF | 13.38 | ||
| P/B | 2.24 | ||
| P/tB | 5.16 | ||
| EV/EBITDA | 8.87 |
EPS(TTM)5
EY7.12%
EPS(NY)5.65
Fwd EY8.05%
FCF(TTM)4.67
FCFY6.65%
OCF(TTM)5.25
OCFY7.47%
SpS41.95
BVpS31.3
TBVpS13.61
PEG (NY)1.43
PEG (5Y)4.02
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.08% | ||
| ROE | 15.93% | ||
| ROCE | 18.69% | ||
| ROIC | 14.18% | ||
| ROICexc | 15.87% | ||
| ROICexgc | 36.79% | ||
| OM | 15.52% | ||
| PM (TTM) | 11.89% | ||
| GM | 34.18% | ||
| FCFM | 11.14% |
ROA(3y)11.85%
ROA(5y)11.15%
ROE(3y)16.74%
ROE(5y)16.18%
ROIC(3y)14.72%
ROIC(5y)14.56%
ROICexc(3y)17.57%
ROICexc(5y)17.67%
ROICexgc(3y)42.32%
ROICexgc(5y)42.39%
ROCE(3y)19.4%
ROCE(5y)19.19%
ROICexcg growth 3Y-3.2%
ROICexcg growth 5Y-0.62%
ROICexc growth 3Y-4.44%
ROICexc growth 5Y-4.72%
OM growth 3Y-0.1%
OM growth 5Y-0.74%
PM growth 3Y-0.57%
PM growth 5Y0.67%
GM growth 3Y-2.71%
GM growth 5Y-1.29%
F-Score6
Asset Turnover1.02
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.04 | ||
| Debt/FCF | 0.26 | ||
| Debt/EBITDA | 0.15 | ||
| Cap/Depr | 51.36% | ||
| Cap/Sales | 1.38% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 68.77% | ||
| Profit Quality | 93.68% | ||
| Current Ratio | 2.41 | ||
| Quick Ratio | 2.41 | ||
| Altman-Z | 7.08 |
F-Score6
WACC9.12%
ROIC/WACC1.56
Cap/Depr(3y)56.75%
Cap/Depr(5y)58.01%
Cap/Sales(3y)1.62%
Cap/Sales(5y)1.75%
Profit Quality(3y)91.3%
Profit Quality(5y)117.2%
High Growth Momentum
Growth
EPS 1Y (TTM)7.99%
EPS 3Y4.86%
EPS 5Y3.5%
EPS Q2Q%11.97%
EPS Next Y9.8%
EPS Next 2Y9.1%
EPS Next 3Y9.12%
EPS Next 5Y9.47%
Revenue 1Y (TTM)6.34%
Revenue growth 3Y2.17%
Revenue growth 5Y3.29%
Sales Q2Q%8.14%
Revenue Next Year6.19%
Revenue Next 2Y5.45%
Revenue Next 3Y5.71%
Revenue Next 5Y5.3%
EBIT growth 1Y6.79%
EBIT growth 3Y2.07%
EBIT growth 5Y2.53%
EBIT Next Year29.47%
EBIT Next 3Y13.4%
EBIT Next 5Y9.54%
FCF growth 1Y5.45%
FCF growth 3Y-6.23%
FCF growth 5Y-2.81%
OCF growth 1Y2.64%
OCF growth 3Y-5.22%
OCF growth 5Y-3.2%