COGNIZANT TECH SOLUTIONS-A (CTSH) Stock Fundamental Analysis
NASDAQ:CTSH - Nasdaq - US1924461023 - Common Stock - Currency: USD
CTSH gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 82 industry peers in the IT Services industry. CTSH gets an excellent profitability rating and is at the same time showing great financial health properties. CTSH has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
CTSH had positive earnings in the past year.
CTSH had a positive operating cash flow in the past year.
Each year in the past 5 years CTSH has been profitable.
Each year in the past 5 years CTSH had a positive operating cash flow.
1.2 Ratios
CTSH has a better Return On Assets (11.17%) than 87.34% of its industry peers.
With a decent Return On Equity value of 15.58%, CTSH is doing good in the industry, outperforming 77.22% of the companies in the same industry.
CTSH has a Return On Invested Capital of 13.53%. This is amongst the best in the industry. CTSH outperforms 87.34% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CTSH is significantly above the industry average of 9.88%.
| 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
Looking at the Profit Margin, with a value of 11.60%, CTSH belongs to the top of the industry, outperforming 84.81% of the companies in the same industry.
In the last couple of years the Profit Margin of CTSH has declined.
CTSH has a Operating Margin of 15.40%. This is amongst the best in the industry. CTSH outperforms 84.81% of its industry peers.
In the last couple of years the Operating Margin of CTSH has declined.
With a Gross Margin value of 34.36%, CTSH perfoms like the industry average, outperforming 49.37% of the companies in the same industry.
CTSH's Gross Margin has declined in the last couple of years.
| 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.
The number of shares outstanding for CTSH has been reduced compared to 1 year ago.
CTSH has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, CTSH has an improved debt to assets ratio.
2.2 Solvency
CTSH has an Altman-Z score of 7.05. This indicates that CTSH is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of CTSH (7.05) is better than 81.01% of its industry peers.
CTSH has a debt to FCF ratio of 0.74. This is a very positive value and a sign of high solvency as it would only need 0.74 years to pay back of all of its debts.
The Debt to FCF ratio of CTSH (0.74) is better than 81.01% of its industry peers.
A Debt/Equity ratio of 0.08 indicates that CTSH is not too dependend on debt financing.
CTSH's Debt to Equity ratio of 0.08 is fine compared to the rest of the industry. CTSH outperforms 72.15% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | 0.74 | ||
| Altman-Z | 7.05 |
ROIC/WACC1.17
WACC11.54%
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 72.15% 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 has a Quick ratio of 2.23. This is in the better half of the industry: CTSH outperforms 72.15% 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.
The Revenue has decreased by -0.11% in the past year.
CTSH shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.72% yearly.
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
CTSH is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.33% yearly.
The Revenue is expected to grow by 6.69% on average over the next years.
EPS Next Y4.36%
EPS Next 2Y5.81%
EPS Next 3Y6.87%
EPS Next 5Y11.33%
Revenue Next Year1.95%
Revenue Next 2Y3.99%
Revenue Next 3Y4.71%
Revenue Next 5Y6.69%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
The Price/Earnings ratio is 17.70, which indicates a rather expensive current valuation of CTSH.
CTSH's Price/Earnings ratio is a bit cheaper when compared to the industry. CTSH is cheaper than 75.95% of the companies in the same industry.
CTSH is valuated rather cheaply when we compare the Price/Earnings ratio to 28.47, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 16.40, CTSH is valued correctly.
Based on the Price/Forward Earnings ratio, CTSH is valued a bit cheaper than 78.48% of the companies in the same industry.
CTSH's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 92.74.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.7 | ||
| Fwd PE | 16.4 |
4.2 Price Multiples
CTSH's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. CTSH is cheaper than 79.75% 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 67.09% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.12 | ||
| EV/EBITDA | 11.52 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of CTSH may justify a higher PE ratio.
PEG (NY)4.06
PEG (5Y)N/A
EPS Next 2Y5.81%
EPS Next 3Y6.87%
5. Dividend
5.1 Amount
CTSH has a Yearly Dividend Yield of 1.45%.
Compared to an average industry Dividend Yield of 2.93, CTSH pays a better dividend. On top of this CTSH pays more dividend than 84.81% of the companies listed in the same industry.
Compared to the average S&P500 Dividend Yield of 2.28, CTSH is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.45% |
5.2 History
The dividend of CTSH is nicely growing with an annual growth rate of 7.88%!
CTSH has been paying a dividend for over 5 years, so it has already some track record.
CTSH has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)7.88%
Div Incr Years5
Div Non Decr Years7
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 2Y5.81%
EPS Next 3Y6.87%
COGNIZANT TECH SOLUTIONS-A
NASDAQ:CTSH (2/4/2025, 8:00:00 PM)
Premarket: 83.7 +0.16 (+0.19%)83.54
+0.64 (+0.77%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners101.72%
Inst Owner Change-0.18%
Ins Owners0.1%
Ins Owner Change0.16%
Market Cap41.42B
Analysts67.65
Price Target85.93 (2.86%)
Short Float %3.8%
Short Ratio6.81
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.45% |
Yearly Dividend1.17
Dividend Growth(5Y)7.88%
DP26.47%
Div Incr Years5
Div Non Decr Years7
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)4.82%
Min EPS beat(2)2.81%
Max EPS beat(2)6.84%
EPS beat(4)3
Avg EPS beat(4)5.09%
Min EPS beat(4)-0.94%
Max EPS beat(4)11.64%
EPS beat(8)6
Avg EPS beat(8)4.39%
EPS beat(12)9
Avg EPS beat(12)3.58%
EPS beat(16)11
Avg EPS beat(16)1.1%
Revenue beat(2)0
Avg Revenue beat(2)-1.01%
Min Revenue beat(2)-1.04%
Max Revenue beat(2)-0.98%
Revenue beat(4)0
Avg Revenue beat(4)-1.27%
Min Revenue beat(4)-2%
Max Revenue beat(4)-0.98%
Revenue beat(8)0
Avg Revenue beat(8)-1.17%
Revenue beat(12)0
Avg Revenue beat(12)-1.68%
Revenue beat(16)1
Avg Revenue beat(16)-1.58%
PT rev (1m)0.17%
PT rev (3m)4.34%
EPS NQ rev (1m)-0.06%
EPS NQ rev (3m)-7.09%
EPS NY rev (1m)-0.16%
EPS NY rev (3m)0.6%
Revenue NQ rev (1m)-0.12%
Revenue NQ rev (3m)3.27%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.73%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.7 | ||
| Fwd PE | 16.4 | ||
| P/S | 2.13 | ||
| P/FCF | 25.12 | ||
| P/OCF | 21.34 | ||
| P/B | 2.87 | ||
| P/tB | 7.35 | ||
| EV/EBITDA | 11.52 |
EPS(TTM)4.72
EY5.65%
EPS(NY)5.09
Fwd EY6.1%
FCF(TTM)3.33
FCFY3.98%
OCF(TTM)3.91
OCFY4.69%
SpS39.15
BVpS29.15
TBVpS11.37
PEG (NY)4.06
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.17% | ||
| ROE | 15.58% | ||
| ROCE | 17.82% | ||
| ROIC | 13.53% | ||
| ROICexc | 15.39% | ||
| ROICexgc | 38.23% | ||
| OM | 15.4% | ||
| PM (TTM) | 11.6% | ||
| GM | 34.36% | ||
| FCFM | 8.49% |
ROA(3y)12.1%
ROA(5y)11.18%
ROE(3y)17.5%
ROE(5y)16.41%
ROIC(3y)15.08%
ROIC(5y)14.83%
ROICexc(3y)18.36%
ROICexc(5y)18.57%
ROICexgc(3y)43.74%
ROICexgc(5y)42.67%
ROCE(3y)19.86%
ROCE(5y)19.54%
ROICexcg growth 3Y1.88%
ROICexcg growth 5Y-5.82%
ROICexc growth 3Y1.25%
ROICexc growth 5Y-7.55%
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%
F-Score3
Asset Turnover0.96
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | 0.74 | ||
| Debt/EBITDA | 0.34 | ||
| Cap/Depr | 54.58% | ||
| Cap/Sales | 1.5% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 55.06% | ||
| Profit Quality | 73.22% | ||
| Current Ratio | 2.23 | ||
| Quick Ratio | 2.23 | ||
| Altman-Z | 7.05 |
F-Score3
WACC11.54%
ROIC/WACC1.17
Cap/Depr(3y)54.69%
Cap/Depr(5y)61.96%
Cap/Sales(3y)1.62%
Cap/Sales(5y)1.92%
Profit Quality(3y)98.67%
Profit Quality(5y)123.76%
High Growth Momentum
Growth
EPS 1Y (TTM)7.76%
EPS 3Y9.98%
EPS 5Y-0.09%
EPS Q2Q%7.76%
EPS Next Y4.36%
EPS Next 2Y5.81%
EPS Next 3Y6.87%
EPS Next 5Y11.33%
Revenue 1Y (TTM)-0.11%
Revenue growth 3Y5.14%
Revenue growth 5Y3.72%
Sales Q2Q%3%
Revenue Next Year1.95%
Revenue Next 2Y3.99%
Revenue Next 3Y4.71%
Revenue Next 5Y6.69%
EBIT growth 1Y5.28%
EBIT growth 3Y6.82%
EBIT growth 5Y-0.41%
EBIT Next Year24.16%
EBIT Next 3Y12.51%
EBIT Next 5Y14.54%
FCF growth 1Y-30.83%
FCF growth 3Y-11.47%
FCF growth 5Y-1.89%
OCF growth 1Y-27.87%
OCF growth 3Y-10.95%
OCF growth 5Y-2.11%