COGNIZANT TECH SOLUTIONS-A (CTSH) Stock Fundamental Analysis
NASDAQ:CTSH - Nasdaq - US1924461023 - Common Stock - Currency: USD
Overall CTSH gets a fundamental rating of 7 out of 10. We evaluated CTSH against 81 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. These ratings could make CTSH a good candidate for quality investing.
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.
In the past 5 years CTSH has always been profitable.
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 11.22%, CTSH belongs to the best of the industry, outperforming 87.65% of the companies in the same industry.
CTSH has a better Return On Equity (15.55%) than 77.78% of its industry peers.
With an excellent Return On Invested Capital value of 14.02%, CTSH belongs to the best of the industry, outperforming 88.89% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for CTSH is above the industry average of 10.56%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.22% | ||
| ROE | 15.55% | ||
| ROIC | 14.02% |
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
CTSH's Profit Margin of 11.35% is amongst the best of the industry. CTSH outperforms 83.95% of its industry peers.
In the last couple of years the Profit Margin of CTSH has remained more or less at the same level.
With an excellent Operating Margin value of 15.33%, CTSH belongs to the best of the industry, outperforming 85.19% 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.
CTSH has a Gross Margin (34.34%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of CTSH has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.33% | ||
| PM (TTM) | 11.35% | ||
| GM | 34.34% |
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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), CTSH is creating some value.
CTSH has less shares outstanding than it did 1 year ago.
CTSH has less shares outstanding than it did 5 years ago.
The debt/assets ratio for CTSH is higher compared to a year ago.
2.2 Solvency
CTSH has an Altman-Z score of 7.20. This indicates that CTSH is financially healthy and has little risk of bankruptcy at the moment.
CTSH's Altman-Z score of 7.20 is amongst the best of the industry. CTSH outperforms 83.95% of its industry peers.
CTSH has a debt to FCF ratio of 0.51. This is a very positive value and a sign of high solvency as it would only need 0.51 years to pay back of all of its debts.
CTSH has a better Debt to FCF ratio (0.51) than 86.42% of its industry peers.
A Debt/Equity ratio of 0.06 indicates that CTSH is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.06, CTSH is in the better half of the industry, outperforming 74.07% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.51 | ||
| Altman-Z | 7.2 |
ROIC/WACC1.34
WACC10.46%
2.3 Liquidity
A Current Ratio of 2.09 indicates that CTSH has no problem at all paying its short term obligations.
CTSH has a Current ratio of 2.09. This is in the better half of the industry: CTSH outperforms 70.37% of its industry peers.
A Quick Ratio of 2.09 indicates that CTSH has no problem at all paying its short term obligations.
Looking at the Quick ratio, with a value of 2.09, CTSH is in the better half of the industry, outperforming 70.37% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.09 | ||
| Quick Ratio | 2.09 |
3. Growth
3.1 Past
CTSH shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 4.40%.
Measured over the past 5 years, CTSH shows a small growth in Earnings Per Share. The EPS has been growing by 3.50% on average per year.
CTSH shows a small growth in Revenue. In the last year, the Revenue has grown by 1.98%.
The Revenue has been growing slightly by 3.29% on average over the past years.
EPS 1Y (TTM)4.4%
EPS 3Y4.86%
EPS 5Y3.5%
EPS Q2Q%2.54%
Revenue 1Y (TTM)1.98%
Revenue growth 3Y2.17%
Revenue growth 5Y3.29%
Sales Q2Q%6.81%
3.2 Future
The Earnings Per Share is expected to grow by 13.14% on average over the next years. This is quite good.
Based on estimates for the next years, CTSH will show a small growth in Revenue. The Revenue will grow by 7.91% on average per year.
EPS Next Y7.64%
EPS Next 2Y7.67%
EPS Next 3Y8.43%
EPS Next 5Y13.14%
Revenue Next Year4.89%
Revenue Next 2Y5.13%
Revenue Next 3Y5.88%
Revenue Next 5Y7.91%
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.
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 rather expensively with a Price/Earnings ratio of 17.52.
Compared to the rest of the industry, the Price/Earnings ratio of CTSH indicates a somewhat cheap valuation: CTSH is cheaper than 75.31% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 29.35. CTSH is valued slightly cheaper when compared to this.
CTSH is valuated correctly with a Price/Forward Earnings ratio of 16.28.
CTSH's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. CTSH is cheaper than 75.31% of the companies in the same industry.
CTSH is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.10, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.52 | ||
| Fwd PE | 16.28 |
4.2 Price Multiples
CTSH's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. CTSH is cheaper than 77.78% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of CTSH indicates a somewhat cheap valuation: CTSH is cheaper than 64.20% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.53 | ||
| EV/EBITDA | 11.17 |
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.
The decent profitability rating of CTSH may justify a higher PE ratio.
PEG (NY)2.29
PEG (5Y)5.01
EPS Next 2Y7.67%
EPS Next 3Y8.43%
5. Dividend
5.1 Amount
CTSH has a Yearly Dividend Yield of 1.48%.
Compared to an average industry Dividend Yield of 3.13, CTSH pays a better dividend. On top of this CTSH pays more dividend than 83.95% of the companies listed in the same industry.
Compared to the average S&P500 Dividend Yield of 2.33, CTSH is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.48% |
5.2 History
The dividend of CTSH is nicely growing with an annual growth rate of 8.46%!
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
26.79% 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.
DP26.79%
EPS Next 2Y7.67%
EPS Next 3Y8.43%
83.23
-0.33 (-0.39%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners100.43%
Inst Owner Change0.42%
Ins Owners0.1%
Ins Owner Change0.2%
Market Cap41.17B
Analysts66.06
Price Target90.89 (9.2%)
Short Float %3.04%
Short Ratio4.44
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.48% |
Yearly Dividend1.21
Dividend Growth(5Y)8.46%
DP26.79%
Div Incr Years5
Div Non Decr Years7
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)6.3%
Min EPS beat(2)5.75%
Max EPS beat(2)6.84%
EPS beat(4)3
Avg EPS beat(4)3.61%
Min EPS beat(4)-0.94%
Max EPS beat(4)6.84%
EPS beat(8)7
Avg EPS beat(8)5.51%
EPS beat(12)9
Avg EPS beat(12)3.76%
EPS beat(16)12
Avg EPS beat(16)3.14%
Revenue beat(2)0
Avg Revenue beat(2)-1.4%
Min Revenue beat(2)-1.76%
Max Revenue beat(2)-1.04%
Revenue beat(4)0
Avg Revenue beat(4)-1.21%
Min Revenue beat(4)-1.76%
Max Revenue beat(4)-0.98%
Revenue beat(8)0
Avg Revenue beat(8)-1.3%
Revenue beat(12)0
Avg Revenue beat(12)-1.67%
Revenue beat(16)1
Avg Revenue beat(16)-1.48%
PT rev (1m)5.77%
PT rev (3m)6.94%
EPS NQ rev (1m)1.56%
EPS NQ rev (3m)1.01%
EPS NY rev (1m)0.37%
EPS NY rev (3m)0.35%
Revenue NQ rev (1m)-0.14%
Revenue NQ rev (3m)-0.75%
Revenue NY rev (1m)-0.91%
Revenue NY rev (3m)-1.24%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.52 | ||
| Fwd PE | 16.28 | ||
| P/S | 2.09 | ||
| P/FCF | 22.53 | ||
| P/OCF | 19.38 | ||
| P/B | 2.86 | ||
| P/tB | 7.03 | ||
| EV/EBITDA | 11.17 |
EPS(TTM)4.75
EY5.71%
EPS(NY)5.11
Fwd EY6.14%
FCF(TTM)3.69
FCFY4.44%
OCF(TTM)4.29
OCFY5.16%
SpS39.9
BVpS29.13
TBVpS11.84
PEG (NY)2.29
PEG (5Y)5.01
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.22% | ||
| ROE | 15.55% | ||
| ROCE | 18.47% | ||
| ROIC | 14.02% | ||
| ROICexc | 16.24% | ||
| ROICexgc | 41.11% | ||
| OM | 15.33% | ||
| PM (TTM) | 11.35% | ||
| GM | 34.34% | ||
| FCFM | 9.26% |
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-Score3
Asset Turnover0.99
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.51 | ||
| Debt/EBITDA | 0.25 | ||
| Cap/Depr | 54.8% | ||
| Cap/Sales | 1.5% | ||
| Interest Coverage | 57.09 | ||
| Cash Conversion | 59.53% | ||
| Profit Quality | 81.56% | ||
| Current Ratio | 2.09 | ||
| Quick Ratio | 2.09 | ||
| Altman-Z | 7.2 |
F-Score3
WACC10.46%
ROIC/WACC1.34
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)4.4%
EPS 3Y4.86%
EPS 5Y3.5%
EPS Q2Q%2.54%
EPS Next Y7.64%
EPS Next 2Y7.67%
EPS Next 3Y8.43%
EPS Next 5Y13.14%
Revenue 1Y (TTM)1.98%
Revenue growth 3Y2.17%
Revenue growth 5Y3.29%
Sales Q2Q%6.81%
Revenue Next Year4.89%
Revenue Next 2Y5.13%
Revenue Next 3Y5.88%
Revenue Next 5Y7.91%
EBIT growth 1Y3.7%
EBIT growth 3Y2.07%
EBIT growth 5Y2.53%
EBIT Next Year27.22%
EBIT Next 3Y16.87%
EBIT Next 5Y16.94%
FCF growth 1Y-9.24%
FCF growth 3Y-6.23%
FCF growth 5Y-2.81%
OCF growth 1Y-8.84%
OCF growth 3Y-5.22%
OCF growth 5Y-3.2%