COGNIZANT TECH SOLUTIONS-A (CTSH) Stock Fundamental Analysis
NASDAQ:CTSH - Nasdaq - US1924461023 - Common Stock - Currency: USD
CTSH gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 82 industry peers in the IT Services industry. CTSH has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. CTSH is not valued too expensively and it also shows a decent 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.
CTSH had positive earnings in each of the past 5 years.
In the past 5 years CTSH always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 11.80%, CTSH belongs to the top of the industry, outperforming 89.02% of the companies in the same industry.
With a decent Return On Equity value of 15.82%, CTSH is doing good in the industry, outperforming 75.61% of the companies in the same industry.
CTSH's Return On Invested Capital of 14.20% is amongst the best of the industry. CTSH outperforms 85.37% of its industry peers.
CTSH had an Average Return On Invested Capital over the past 3 years of 14.72%. This is significantly below the industry average of 21.64%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.8% | ||
| ROE | 15.82% | ||
| ROIC | 14.2% |
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 11.73%. This is amongst the best in the industry. CTSH outperforms 86.59% of its industry peers.
CTSH's Profit Margin has been stable in the last couple of years.
CTSH has a better Operating Margin (15.42%) than 84.15% of its industry peers.
CTSH's Operating Margin has been stable in the last couple of years.
CTSH's Gross Margin of 34.25% is in line compared to the rest of the industry. CTSH outperforms 47.56% of its industry peers.
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 | 15.42% | ||
| PM (TTM) | 11.73% | ||
| GM | 34.25% |
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
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so CTSH is still 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.
CTSH has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 7.23 indicates that CTSH is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 7.23, CTSH belongs to the top of the industry, outperforming 82.93% of the companies in the same industry.
The Debt to FCF ratio of CTSH is 0.28, which is an excellent value as it means it would take CTSH, only 0.28 years of fcf income to pay off all of its debts.
CTSH has a better Debt to FCF ratio (0.28) than 89.02% of its industry peers.
A Debt/Equity ratio of 0.04 indicates that CTSH is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.04, CTSH is in the better half of the industry, outperforming 76.83% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.04 | ||
| Debt/FCF | 0.28 | ||
| Altman-Z | 7.23 |
ROIC/WACC1.53
WACC9.3%
2.3 Liquidity
CTSH has a Current Ratio of 2.22. This indicates that CTSH is financially healthy and has no problem in meeting its short term obligations.
With a decent Current ratio value of 2.22, CTSH is doing good in the industry, outperforming 68.29% of the companies in the same industry.
CTSH has a Quick Ratio of 2.22. This indicates that CTSH is financially healthy and has no problem in meeting its short term obligations.
CTSH has a better Quick ratio (2.22) than 68.29% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.22 | ||
| Quick Ratio | 2.22 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 6.58% over the past year.
CTSH shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 3.50% yearly.
Looking at the last year, CTSH shows a small growth in Revenue. The Revenue has grown by 4.09% in the last 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)4.09%
Revenue growth 3Y2.17%
Revenue growth 5Y3.29%
Sales Q2Q%7.46%
3.2 Future
The Earnings Per Share is expected to grow by 7.64% on average over the next years.
The Revenue is expected to grow by 5.22% on average over the next years.
EPS Next Y8.88%
EPS Next 2Y8.17%
EPS Next 3Y8.28%
EPS Next 5Y7.64%
Revenue Next Year5.47%
Revenue Next 2Y5.03%
Revenue Next 3Y5.49%
Revenue Next 5Y5.22%
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
A Price/Earnings ratio of 15.53 indicates a correct valuation of CTSH.
Based on the Price/Earnings ratio, CTSH is valued a bit cheaper than the industry average as 71.95% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 26.34. CTSH is valued slightly cheaper when compared to this.
The Price/Forward Earnings ratio is 13.58, which 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 73.17% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of CTSH to the average of the S&P500 Index (21.03), we can say CTSH is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.53 | ||
| Fwd PE | 13.58 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CTSH is valued cheaply inside the industry as 80.49% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, CTSH is valued a bit cheaper than the industry average as 75.61% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.43 | ||
| EV/EBITDA | 9.82 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
CTSH has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)1.75
PEG (5Y)4.44
EPS Next 2Y8.17%
EPS Next 3Y8.28%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.57%, CTSH has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.48, CTSH pays a better dividend. On top of this CTSH pays more dividend than 84.15% of the companies listed 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 | 1.57% |
5.2 History
On average, the dividend of CTSH grows each year by 8.46%, 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)8.46%
Div Incr Years5
Div Non Decr Years7
5.3 Sustainability
25.63% 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 the earnings are growing slower. This means the dividend growth is not sustainable.
DP25.63%
EPS Next 2Y8.17%
EPS Next 3Y8.28%
75.47
-3.67 (-4.64%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners101.1%
Inst Owner Change1.36%
Ins Owners0.1%
Ins Owner Change1.89%
Market Cap37.20B
Analysts68.75
Price Target88.62 (17.42%)
Short Float %3.79%
Short Ratio5.02
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.57% |
Yearly Dividend1.21
Dividend Growth(5Y)8.46%
DP25.63%
Div Incr Years5
Div Non Decr Years7
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.2%
Min EPS beat(2)0.64%
Max EPS beat(2)5.75%
EPS beat(4)4
Avg EPS beat(4)4.01%
Min EPS beat(4)0.64%
Max EPS beat(4)6.84%
EPS beat(8)7
Avg EPS beat(8)5.06%
EPS beat(12)9
Avg EPS beat(12)3.65%
EPS beat(16)12
Avg EPS beat(16)3.1%
Revenue beat(2)0
Avg Revenue beat(2)-1.79%
Min Revenue beat(2)-1.82%
Max Revenue beat(2)-1.76%
Revenue beat(4)0
Avg Revenue beat(4)-1.4%
Min Revenue beat(4)-1.82%
Max Revenue beat(4)-0.98%
Revenue beat(8)0
Avg Revenue beat(8)-1.48%
Revenue beat(12)0
Avg Revenue beat(12)-1.66%
Revenue beat(16)1
Avg Revenue beat(16)-1.52%
PT rev (1m)0.51%
PT rev (3m)-2.5%
EPS NQ rev (1m)0.16%
EPS NQ rev (3m)2.17%
EPS NY rev (1m)0.01%
EPS NY rev (3m)1.15%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.13%
Revenue NY rev (1m)-0.01%
Revenue NY rev (3m)0.55%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.53 | ||
| Fwd PE | 13.58 | ||
| P/S | 1.85 | ||
| P/FCF | 17.43 | ||
| P/OCF | 15.32 | ||
| P/B | 2.5 | ||
| P/tB | 5.87 | ||
| EV/EBITDA | 9.82 |
EPS(TTM)4.86
EY6.44%
EPS(NY)5.56
Fwd EY7.36%
FCF(TTM)4.33
FCFY5.74%
OCF(TTM)4.93
OCFY6.53%
SpS40.76
BVpS30.22
TBVpS12.86
PEG (NY)1.75
PEG (5Y)4.44
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.8% | ||
| ROE | 15.82% | ||
| ROCE | 18.71% | ||
| ROIC | 14.2% | ||
| ROICexc | 16.14% | ||
| ROICexgc | 39.14% | ||
| OM | 15.42% | ||
| PM (TTM) | 11.73% | ||
| GM | 34.25% | ||
| FCFM | 10.62% |
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-Score6
Asset Turnover1.01
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.04 | ||
| Debt/FCF | 0.28 | ||
| Debt/EBITDA | 0.16 | ||
| Cap/Depr | 54.13% | ||
| Cap/Sales | 1.47% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 66.66% | ||
| Profit Quality | 90.54% | ||
| Current Ratio | 2.22 | ||
| Quick Ratio | 2.22 | ||
| Altman-Z | 7.23 |
F-Score6
WACC9.3%
ROIC/WACC1.53
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 Y8.88%
EPS Next 2Y8.17%
EPS Next 3Y8.28%
EPS Next 5Y7.64%
Revenue 1Y (TTM)4.09%
Revenue growth 3Y2.17%
Revenue growth 5Y3.29%
Sales Q2Q%7.46%
Revenue Next Year5.47%
Revenue Next 2Y5.03%
Revenue Next 3Y5.49%
Revenue Next 5Y5.22%
EBIT growth 1Y5.62%
EBIT growth 3Y2.07%
EBIT growth 5Y2.53%
EBIT Next Year28.94%
EBIT Next 3Y13.35%
EBIT Next 5Y9.47%
FCF growth 1Y-20.4%
FCF growth 3Y-6.23%
FCF growth 5Y-2.81%
OCF growth 1Y-18.79%
OCF growth 3Y-5.22%
OCF growth 5Y-3.2%