COGNIZANT TECH SOLUTIONS-A (CTSH)
US1924461023 - Common Stock
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. These ratings would make CTSH suitable 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.
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 87.65% of its industry peers.
CTSH has a better Return On Equity (15.58%) than 77.78% of its industry peers.
CTSH's Return On Invested Capital of 13.53% is amongst the best of the industry. CTSH outperforms 87.65% of its industry peers.
CTSH had an Average Return On Invested Capital over the past 3 years of 15.08%. This is significantly above the industry average of 9.36%.
| 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 has a Profit Margin of 11.60%. This is amongst the best in the industry. CTSH outperforms 83.95% of its industry peers.
In the last couple of years the Profit Margin of CTSH has declined.
CTSH has a better Operating Margin (15.40%) than 85.19% of its industry peers.
CTSH's Operating Margin has declined in the last couple of years.
CTSH's Gross Margin of 34.36% is in line compared to the rest of the industry. CTSH outperforms 49.38% of 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
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so CTSH is still creating some value.
Compared to 1 year ago, CTSH has less shares outstanding
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 6.68. 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 6.68, CTSH belongs to the top of the industry, outperforming 80.25% of the companies in the same industry.
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.
With an excellent Debt to FCF ratio value of 0.74, CTSH belongs to the best of the industry, outperforming 81.48% of the companies in the same industry.
A Debt/Equity ratio of 0.08 indicates that CTSH is not too dependend on debt financing.
CTSH has a better Debt to Equity ratio (0.08) than 71.60% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | 0.74 | ||
| Altman-Z | 6.68 |
ROIC/WACC1.2
WACC11.28%
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 has a Current ratio of 2.23. This is in the better half of the industry: CTSH outperforms 71.60% of its industry peers.
A Quick Ratio of 2.23 indicates that CTSH has no problem at all paying its short term obligations.
With a decent Quick ratio value of 2.23, CTSH is doing good in the industry, outperforming 71.60% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.23 | ||
| Quick Ratio | 2.23 |
3. Growth
3.1 Past
CTSH shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.76%.
Measured over the past years, CTSH shows a decrease in Earnings Per Share. The EPS has been decreasing by -0.09% on average per year.
Looking at the last year, CTSH shows a decrease in Revenue. The Revenue has decreased by -0.11% in the last 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
The Earnings Per Share is expected to grow by 11.33% on average over the next years. This is quite good.
The Revenue is expected to grow by 8.03% on average over the next years. This is quite good.
EPS Next Y4.52%
EPS Next 2Y5.84%
EPS Next 3Y6.97%
EPS Next 5Y11.33%
Revenue Next Year1.95%
Revenue Next 2Y4.06%
Revenue Next 3Y4.79%
Revenue Next 5Y8.03%
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
With a Price/Earnings ratio of 16.18, CTSH is valued correctly.
CTSH's Price/Earnings ratio is a bit cheaper when compared to the industry. CTSH is cheaper than 76.54% of the companies in the same industry.
CTSH is valuated rather cheaply when we compare the Price/Earnings ratio to 27.41, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 14.98, the valuation of CTSH can be described as correct.
Based on the Price/Forward Earnings ratio, CTSH is valued a bit cheaper than 79.01% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 23.69. CTSH is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.18 | ||
| Fwd PE | 14.98 |
4.2 Price Multiples
80.25% of the companies in the same industry are more expensive than CTSH, based on the Enterprise Value to EBITDA ratio.
66.67% of the companies in the same industry are more expensive than CTSH, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.97 | ||
| EV/EBITDA | 10.51 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
CTSH has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)3.58
PEG (5Y)N/A
EPS Next 2Y5.84%
EPS Next 3Y6.97%
5. Dividend
5.1 Amount
CTSH has a Yearly Dividend Yield of 1.50%.
Compared to an average industry Dividend Yield of 2.84, CTSH pays a better dividend. On top of this CTSH pays more dividend than 86.42% of the companies listed in the same industry.
CTSH's Dividend Yield is slightly below the S&P500 average, which is at 2.33.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.5% |
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.
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
26.47% of the earnings are spent on dividend by CTSH. This is a low number and sustainable payout ratio.
The dividend of CTSH is growing, but earnings are growing more, so the dividend growth is sustainable.
DP26.47%
EPS Next 2Y5.84%
EPS Next 3Y6.97%
COGNIZANT TECH SOLUTIONS-A
NASDAQ:CTSH (1/3/2025, 8:00:01 PM)
After market: 76.38 0 (0%)76.38
-0.03 (-0.04%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners101.72%
Inst Owner Change-1.12%
Ins Owners0.1%
Ins Owner Change0.16%
Market Cap37.87B
Analysts68
Price Target85.78 (12.31%)
Short Float %3.63%
Short Ratio5.55
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.5% |
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)0.93%
PT rev (3m)4.46%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-7.04%
EPS NY rev (1m)-0.01%
EPS NY rev (3m)0.76%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)3.39%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.73%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.18 | ||
| Fwd PE | 14.98 | ||
| P/S | 1.95 | ||
| P/FCF | 22.97 | ||
| P/OCF | 19.51 | ||
| P/B | 2.62 | ||
| P/tB | 6.72 | ||
| EV/EBITDA | 10.51 |
EPS(TTM)4.72
EY6.18%
EPS(NY)5.1
Fwd EY6.67%
FCF(TTM)3.33
FCFY4.35%
OCF(TTM)3.91
OCFY5.13%
SpS39.15
BVpS29.15
TBVpS11.37
PEG (NY)3.58
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 | 6.68 |
F-Score3
WACC11.28%
ROIC/WACC1.2
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 Y4.52%
EPS Next 2Y5.84%
EPS Next 3Y6.97%
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 2Y4.06%
Revenue Next 3Y4.79%
Revenue Next 5Y8.03%
EBIT growth 1Y5.28%
EBIT growth 3Y6.82%
EBIT growth 5Y-0.41%
EBIT Next Year23.74%
EBIT Next 3Y12.55%
EBIT Next 5Y13.72%
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%