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 is not valued too expensively and it also shows a decent growth rate. These ratings would make CTSH suitable 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
The Return On Assets of CTSH (11.22%) is better than 86.59% of its industry peers.
Looking at the Return On Equity, with a value of 15.55%, CTSH is in the better half of the industry, outperforming 75.61% of the companies in the same industry.
CTSH has a Return On Invested Capital of 14.02%. This is amongst the best in the industry. CTSH outperforms 85.37% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for CTSH is significantly below the industry average of 22.65%.
| 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 has a Profit Margin of 11.35%. This is amongst the best in the industry. CTSH outperforms 80.49% of its industry peers.
In the last couple of years the Profit Margin of CTSH has remained more or less at the same level.
CTSH has a Operating Margin of 15.33%. This is amongst the best in the industry. CTSH outperforms 82.93% of its industry peers.
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 of 34.34%. This is comparable to the rest of the industry: CTSH outperforms 46.34% of its industry peers.
CTSH's Gross Margin has been stable in the last couple of years.
| 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
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.
CTSH has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, CTSH has a worse debt to assets ratio.
2.2 Solvency
CTSH has an Altman-Z score of 6.89. This indicates that CTSH is financially healthy and has little risk of bankruptcy at the moment.
CTSH has a Altman-Z score of 6.89. This is amongst the best in the industry. CTSH outperforms 84.15% 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 Debt to FCF ratio of 0.51. This is amongst the best in the industry. CTSH outperforms 86.59% of its industry peers.
CTSH has a Debt/Equity ratio of 0.06. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.06, CTSH is in the better half of the industry, outperforming 74.39% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.51 | ||
| Altman-Z | 6.89 |
ROIC/WACC1.55
WACC9.04%
2.3 Liquidity
CTSH has a Current Ratio of 2.09. This indicates that CTSH is financially healthy and has no problem in meeting its short term obligations.
CTSH has a better Current ratio (2.09) than 67.07% of its industry peers.
A Quick Ratio of 2.09 indicates that CTSH has no problem at all paying its short term obligations.
CTSH's Quick ratio of 2.09 is fine compared to the rest of the industry. CTSH outperforms 67.07% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.09 | ||
| Quick Ratio | 2.09 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 6.58% over the past year.
The Earnings Per Share has been growing slightly by 3.50% on average over the past years.
The Revenue has been growing slightly by 1.98% in the past year.
Measured over the past years, CTSH shows a small growth in Revenue. The Revenue has been growing by 3.29% on average per year.
EPS 1Y (TTM)6.58%
EPS 3Y4.86%
EPS 5Y3.5%
EPS Q2Q%9.82%
Revenue 1Y (TTM)1.98%
Revenue growth 3Y2.17%
Revenue growth 5Y3.29%
Sales Q2Q%7.46%
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 8.80% yearly.
The Revenue is expected to grow by 5.40% on average over the next years.
EPS Next Y7.4%
EPS Next 2Y7.51%
EPS Next 3Y8.22%
EPS Next 5Y8.8%
Revenue Next Year4.79%
Revenue Next 2Y4.97%
Revenue Next 3Y5.63%
Revenue Next 5Y5.4%
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
With a Price/Earnings ratio of 15.99, CTSH is valued correctly.
Compared to the rest of the industry, the Price/Earnings ratio of CTSH indicates a somewhat cheap valuation: CTSH is cheaper than 71.95% of the companies listed in the same industry.
CTSH's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.22.
A Price/Forward Earnings ratio of 14.15 indicates a correct valuation of CTSH.
Compared to the rest of the industry, the Price/Forward Earnings ratio of CTSH indicates a somewhat cheap valuation: CTSH is cheaper than 79.27% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.86, CTSH is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.99 | ||
| Fwd PE | 14.15 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CTSH is valued a bit cheaper than 76.83% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, CTSH is valued a bit cheaper than the industry average as 64.63% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.96 | ||
| EV/EBITDA | 10.36 |
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)2.16
PEG (5Y)4.57
EPS Next 2Y7.51%
EPS Next 3Y8.22%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.65%, 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 2.43. CTSH pays more dividend than 85.37% of the companies in the same industry.
CTSH's Dividend Yield is slightly below the S&P500 average, which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.65% |
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 around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP26.79%
EPS Next 2Y7.51%
EPS Next 3Y8.22%
77.7
+2.47 (+3.28%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners100.43%
Inst Owner Change-1.01%
Ins Owners0.1%
Ins Owner Change0.82%
Market Cap38.30B
Analysts66.67
Price Target88.37 (13.73%)
Short Float %3.58%
Short Ratio3.94
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.65% |
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)-2.86%
PT rev (3m)2.84%
EPS NQ rev (1m)-0.08%
EPS NQ rev (3m)1.38%
EPS NY rev (1m)-0.24%
EPS NY rev (3m)0.15%
Revenue NQ rev (1m)0.95%
Revenue NQ rev (3m)0.79%
Revenue NY rev (1m)-0.08%
Revenue NY rev (3m)-1.2%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.99 | ||
| Fwd PE | 14.15 | ||
| P/S | 1.94 | ||
| P/FCF | 20.96 | ||
| P/OCF | 18.03 | ||
| P/B | 2.66 | ||
| P/tB | 6.54 | ||
| EV/EBITDA | 10.36 |
EPS(TTM)4.86
EY6.25%
EPS(NY)5.49
Fwd EY7.07%
FCF(TTM)3.71
FCFY4.77%
OCF(TTM)4.31
OCFY5.55%
SpS40.04
BVpS29.23
TBVpS11.88
PEG (NY)2.16
PEG (5Y)4.57
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 | 6.89 |
F-Score3
WACC9.04%
ROIC/WACC1.55
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)6.58%
EPS 3Y4.86%
EPS 5Y3.5%
EPS Q2Q%9.82%
EPS Next Y7.4%
EPS Next 2Y7.51%
EPS Next 3Y8.22%
EPS Next 5Y8.8%
Revenue 1Y (TTM)1.98%
Revenue growth 3Y2.17%
Revenue growth 5Y3.29%
Sales Q2Q%7.46%
Revenue Next Year4.79%
Revenue Next 2Y4.97%
Revenue Next 3Y5.63%
Revenue Next 5Y5.4%
EBIT growth 1Y3.7%
EBIT growth 3Y2.07%
EBIT growth 5Y2.53%
EBIT Next Year27.88%
EBIT Next 3Y13.7%
EBIT Next 5Y10.58%
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%