COGNIZANT TECH SOLUTIONS-A (CTSH) Stock Fundamental Analysis
NASDAQ:CTSH - Nasdaq - US1924461023 - Common Stock - Currency: USD
Overall CTSH gets a fundamental rating of 6 out of 10. We evaluated CTSH against 82 industry peers in the IT Services industry. Both the health and profitability get an excellent rating, making CTSH a very profitable company, without any liquidiy or solvency issues. CTSH has a decent growth rate and is not valued too expensively.
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.
In the past 5 years CTSH always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of CTSH (11.80%) is better than 89.02% of its industry peers.
CTSH has a better Return On Equity (15.82%) than 75.61% of its industry peers.
CTSH has a better Return On Invested Capital (14.20%) than 85.37% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CTSH 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's Profit Margin of 11.73% is amongst the best of the industry. CTSH outperforms 86.59% of its industry peers.
In the last couple of years the Profit Margin of CTSH has remained more or less at the same level.
The Operating Margin of CTSH (15.42%) is better than 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.
The Gross Margin of CTSH (34.25%) 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 | 15.42% | ||
| 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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), CTSH is creating some value.
Compared to 1 year ago, CTSH has less shares outstanding
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 7.22. This indicates that CTSH is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of CTSH (7.22) is better than 84.15% of its industry peers.
CTSH has a debt to FCF ratio of 0.28. This is a very positive value and a sign of high solvency as it would only need 0.28 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 0.28, CTSH belongs to the best of the industry, outperforming 89.02% of the companies in the same industry.
A Debt/Equity ratio of 0.04 indicates that CTSH is not too dependend on debt financing.
The Debt to Equity ratio of CTSH (0.04) is better than 76.83% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.04 | ||
| Debt/FCF | 0.28 | ||
| Altman-Z | 7.22 |
ROIC/WACC1.47
WACC9.63%
2.3 Liquidity
A Current Ratio of 2.22 indicates that CTSH has no problem at all paying 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.
A Quick Ratio of 2.22 indicates that CTSH has no problem at all paying its short term obligations.
CTSH's Quick ratio of 2.22 is fine compared to the rest of the industry. CTSH outperforms 68.29% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.22 | ||
| Quick Ratio | 2.22 |
3. Growth
3.1 Past
CTSH shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 6.58%.
The Earnings Per Share has been growing slightly by 3.50% on average over the past years.
Looking at the last year, CTSH shows a small growth in Revenue. The Revenue has grown by 4.09% in the last year.
CTSH shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.29% yearly.
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 Y9.05%
EPS Next 2Y8.28%
EPS Next 3Y8.35%
EPS Next 5Y7.64%
Revenue Next Year5.52%
Revenue Next 2Y5.05%
Revenue Next 3Y5.46%
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
The Price/Earnings ratio is 15.51, which indicates a correct valuation of CTSH.
Compared to the rest of the industry, the Price/Earnings ratio of CTSH indicates a somewhat cheap valuation: CTSH is cheaper than 75.61% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 27.30. CTSH is valued slightly cheaper when compared to this.
Based on the Price/Forward Earnings ratio of 13.53, the valuation of CTSH can be described as correct.
Compared to the rest of the industry, the Price/Forward Earnings ratio of CTSH indicates a somewhat cheap valuation: CTSH is cheaper than 76.83% of the companies listed in the same industry.
CTSH is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.51 | ||
| Fwd PE | 13.53 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CTSH is valued cheaper than 80.49% 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 75.61% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.41 | ||
| EV/EBITDA | 9.81 |
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)1.71
PEG (5Y)4.43
EPS Next 2Y8.28%
EPS Next 3Y8.35%
5. Dividend
5.1 Amount
CTSH has a Yearly Dividend Yield of 1.62%.
Compared to an average industry Dividend Yield of 2.48, CTSH pays a better dividend. On top of this CTSH pays more dividend than 85.37% of the companies listed in the same industry.
Compared to the average S&P500 Dividend Yield of 2.35, CTSH is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.62% |
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.
CTSH has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)8.46%
Div Incr Years5
Div Non Decr Years7
5.3 Sustainability
CTSH pays out 25.63% of its income as dividend. This is a 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 2Y8.28%
EPS Next 3Y8.35%
75.36
-1.37 (-1.79%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners101.1%
Inst Owner Change-0.01%
Ins Owners0.1%
Ins Owner Change1.88%
Market Cap37.15B
Analysts68.75
Price Target88.62 (17.6%)
Short Float %3.69%
Short Ratio5.07
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.62% |
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)0.12%
PT rev (3m)-2.53%
EPS NQ rev (1m)0.22%
EPS NQ rev (3m)2.62%
EPS NY rev (1m)0.17%
EPS NY rev (3m)1.28%
Revenue NQ rev (1m)0.09%
Revenue NQ rev (3m)1.36%
Revenue NY rev (1m)0.04%
Revenue NY rev (3m)0.7%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.51 | ||
| Fwd PE | 13.53 | ||
| P/S | 1.85 | ||
| P/FCF | 17.41 | ||
| P/OCF | 15.29 | ||
| P/B | 2.49 | ||
| P/tB | 5.86 | ||
| EV/EBITDA | 9.81 |
EPS(TTM)4.86
EY6.45%
EPS(NY)5.57
Fwd EY7.39%
FCF(TTM)4.33
FCFY5.74%
OCF(TTM)4.93
OCFY6.54%
SpS40.76
BVpS30.22
TBVpS12.86
PEG (NY)1.71
PEG (5Y)4.43
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 | 7.22 |
F-Score6
WACC9.63%
ROIC/WACC1.47
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 Y9.05%
EPS Next 2Y8.28%
EPS Next 3Y8.35%
EPS Next 5Y7.64%
Revenue 1Y (TTM)4.09%
Revenue growth 3Y2.17%
Revenue growth 5Y3.29%
Sales Q2Q%7.46%
Revenue Next Year5.52%
Revenue Next 2Y5.05%
Revenue Next 3Y5.46%
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%