COGNIZANT TECH SOLUTIONS-A (CTSH)
US1924461023 - Common Stock
CTSH gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 83 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 has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
CTSH had positive earnings in the past year.
In the past year CTSH had a positive cash flow from operations.
In the past 5 years CTSH has always been profitable.
Each year in the past 5 years CTSH had a positive operating cash flow.
1.2 Ratios
The Return On Assets of CTSH (11.17%) is better than 87.80% of its industry peers.
Looking at the Return On Equity, with a value of 15.58%, CTSH is in the better half of the industry, outperforming 78.05% of the companies in the same industry.
CTSH's Return On Invested Capital of 13.53% is amongst the best of the industry. CTSH outperforms 87.80% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CTSH is significantly above the industry average of 9.56%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.17% | ||
| ROE | 15.58% | ||
| ROIC | 13.53% |
ROA(3y)12.1%
ROA(5y)11.18%
ROE(3y)17.5%
ROE(5y)16.41%
ROIC(3y)15.08%
ROIC(5y)14.83%
1.3 Margins
CTSH's Profit Margin of 11.60% is amongst the best of the industry. CTSH outperforms 84.15% of its industry peers.
CTSH's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 15.40%, CTSH belongs to the top of the industry, outperforming 85.37% of the companies in the same industry.
CTSH's Operating Margin has declined in the last couple of years.
CTSH has a Gross Margin (34.36%) which is in line with its industry peers.
In the last couple of years the Gross Margin of CTSH has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.4% | ||
| PM (TTM) | 11.6% | ||
| GM | 34.36% |
OM growth 3Y1.6%
OM growth 5Y-3.98%
PM growth 3Y9.53%
PM growth 5Y-3.36%
GM growth 3Y-1.63%
GM growth 5Y-2.38%
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.
CTSH has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, CTSH has less shares outstanding
Compared to 1 year ago, CTSH has an improved debt to assets ratio.
2.2 Solvency
CTSH has an Altman-Z score of 6.84. This indicates that CTSH is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 6.84, CTSH belongs to the top of the industry, outperforming 80.49% of the companies in the same industry.
The Debt to FCF ratio of CTSH is 0.74, which is an excellent value as it means it would take CTSH, only 0.74 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.74, CTSH belongs to the top of the industry, outperforming 81.71% of the companies in the same industry.
CTSH has a Debt/Equity ratio of 0.08. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.08, CTSH is in the better half of the industry, outperforming 71.95% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | 0.74 | ||
| Altman-Z | 6.84 |
ROIC/WACC1.25
WACC10.79%
2.3 Liquidity
CTSH has a Current Ratio of 2.23. This indicates that CTSH is financially healthy and has no problem in meeting its short term obligations.
CTSH's Current ratio of 2.23 is fine compared to the rest of the industry. CTSH outperforms 69.51% of its industry peers.
CTSH has a Quick Ratio of 2.23. This indicates that CTSH is financially healthy and has no problem in meeting its short term obligations.
CTSH's Quick ratio of 2.23 is fine compared to the rest of the industry. CTSH outperforms 69.51% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.23 | ||
| Quick Ratio | 2.23 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 7.76% over the past year.
The Earnings Per Share has been decreasing by -0.09% on average over the past years.
Looking at the last year, CTSH shows a decrease in Revenue. The Revenue has decreased by -0.11% in the last year.
Measured over the past years, CTSH shows a small growth in Revenue. The Revenue has been growing by 3.72% on average per year.
EPS 1Y (TTM)7.76%
EPS 3Y9.98%
EPS 5Y-0.09%
EPS Q2Q%7.76%
Revenue 1Y (TTM)-0.11%
Revenue growth 3Y5.14%
Revenue growth 5Y3.72%
Sales Q2Q%3%
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 11.77% on average per year.
The Revenue is expected to grow by 6.91% on average over the next years.
EPS Next Y4.53%
EPS Next 2Y5.82%
EPS Next 3Y6.96%
EPS Next 5Y11.77%
Revenue Next Year1.95%
Revenue Next 2Y4.05%
Revenue Next 3Y4.78%
Revenue Next 5Y6.91%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 16.85, CTSH is valued correctly.
Based on the Price/Earnings ratio, CTSH is valued a bit cheaper than the industry average as 76.83% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 29.29, CTSH is valued a bit cheaper.
With a Price/Forward Earnings ratio of 15.61, CTSH is valued correctly.
Based on the Price/Forward Earnings ratio, CTSH is valued a bit cheaper than the industry average as 79.27% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 24.01. CTSH is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.85 | ||
| Fwd PE | 15.61 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CTSH is valued a bit cheaper than 78.05% of the companies in the same industry.
CTSH's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. CTSH is cheaper than 63.41% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.92 | ||
| EV/EBITDA | 10.96 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates CTSH does not grow enough to justify the current Price/Earnings ratio.
CTSH has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)3.72
PEG (5Y)N/A
EPS Next 2Y5.82%
EPS Next 3Y6.96%
5. Dividend
5.1 Amount
CTSH has a Yearly Dividend Yield of 1.52%. Purely for dividend investing, there may be better candidates out there.
CTSH's Dividend Yield is rather good when compared to the industry average which is at 2.84. CTSH pays more dividend than 86.59% of the companies in the same industry.
CTSH's Dividend Yield is slightly below the S&P500 average, which is at 2.19.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.52% |
5.2 History
On average, the dividend of CTSH grows each year by 7.88%, 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)7.88%
Div Incr Years4
Div Non Decr Years6
5.3 Sustainability
CTSH pays out 26.47% of its income as dividend. This is a sustainable payout ratio.
CTSH's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP26.47%
EPS Next 2Y5.82%
EPS Next 3Y6.96%
COGNIZANT TECH SOLUTIONS-A
NASDAQ:CTSH (11/22/2024, 8:00:00 PM)
After market: 78.99 -0.55 (-0.69%)79.54
+0.68 (+0.86%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap39.44B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.52% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
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EPS beat(4)
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EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
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EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
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Min Revenue beat(4)
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Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
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Revenue beat(16)
Avg Revenue beat(16)
PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.85 | ||
| Fwd PE | 15.61 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)3.72
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.17% | ||
| ROE | 15.58% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 15.4% | ||
| PM (TTM) | 11.6% | ||
| GM | 34.36% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.96
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 2.23 | ||
| Quick Ratio | 2.23 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)7.76%
EPS 3Y9.98%
EPS 5Y
EPS Q2Q%
EPS Next Y4.53%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)-0.11%
Revenue growth 3Y5.14%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y