COGNIZANT TECH SOLUTIONS-A (CTSH)
US1924461023 - Common Stock
Taking everything into account, CTSH scores 6 out of 10 in our fundamental rating. CTSH was compared to 86 industry peers in the IT Services industry. CTSH has an excellent financial health rating, but there are some minor concerns on its profitability. CTSH is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year CTSH was profitable.
In the past year CTSH had a positive cash flow from operations.
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
CTSH has a better Return On Assets (11.36%) than 88.10% of its industry peers.
With a decent Return On Equity value of 15.51%, CTSH is doing good in the industry, outperforming 78.57% of the companies in the same industry.
CTSH has a better Return On Invested Capital (14.47%) than 86.90% of its industry peers.
CTSH had an Average Return On Invested Capital over the past 3 years of 15.08%. This is in line with the industry average of 13.14%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.36% | ||
| ROE | 15.51% | ||
| ROIC | 14.47% |
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 10.84%. This is in the better half of the industry: CTSH outperforms 77.38% of its industry peers.
CTSH's Profit Margin has declined in the last couple of years.
CTSH's Operating Margin of 15.20% is amongst the best of the industry. CTSH outperforms 83.33% of its industry peers.
CTSH's Operating Margin has declined in the last couple of years.
The Gross Margin of CTSH (34.37%) is comparable to the rest of the industry.
In the last couple of years the Gross Margin of CTSH has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.2% | ||
| PM (TTM) | 10.84% | ||
| GM | 34.37% |
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.
CTSH has less shares outstanding than it did 1 year ago.
The number of shares outstanding for CTSH has been reduced compared to 5 years ago.
CTSH has a better debt/assets ratio than last year.
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.
The Altman-Z score of CTSH (6.89) is better than 83.33% of its industry peers.
The Debt to FCF ratio of CTSH is 0.45, which is an excellent value as it means it would take CTSH, only 0.45 years of fcf income to pay off all of its debts.
CTSH has a Debt to FCF ratio of 0.45. This is amongst the best in the industry. CTSH outperforms 85.71% of its industry peers.
A Debt/Equity ratio of 0.04 indicates that CTSH is not too dependend on debt financing.
CTSH's Debt to Equity ratio of 0.04 is fine compared to the rest of the industry. CTSH outperforms 76.19% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.04 | ||
| Debt/FCF | 0.45 | ||
| Altman-Z | 6.89 |
ROIC/WACC1.35
WACC10.69%
2.3 Liquidity
A Current Ratio of 2.35 indicates that CTSH has no problem at all paying its short term obligations.
CTSH has a better Current ratio (2.35) than 72.62% of its industry peers.
CTSH has a Quick Ratio of 2.35. This indicates that CTSH is financially healthy and has no problem in meeting its short term obligations.
The Quick ratio of CTSH (2.35) is better than 72.62% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.35 | ||
| Quick Ratio | 2.35 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.93% over the past year.
CTSH shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -0.09% yearly.
The Revenue has decreased by -0.58% in the past year.
Measured over the past years, CTSH shows a small growth in Revenue. The Revenue has been growing by 3.72% on average per year.
EPS 1Y (TTM)2.93%
EPS 3Y9.98%
EPS 5Y-0.09%
EPS growth Q2Q0.9%
Revenue 1Y (TTM)-0.58%
Revenue growth 3Y5.14%
Revenue growth 5Y3.72%
Revenue growth Q2Q-1.08%
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 11.88% yearly.
The Revenue is expected to grow by 6.96% on average over the next years.
EPS Next Y3.63%
EPS Next 2Y5.67%
EPS Next 3Y7.24%
EPS Next 5Y11.88%
Revenue Next Year0.41%
Revenue Next 2Y2.75%
Revenue Next 3Y4.49%
Revenue Next 5Y6.96%
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 14.53 indicates a correct valuation of CTSH.
Based on the Price/Earnings ratio, CTSH is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.
CTSH's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.73.
The Price/Forward Earnings ratio is 13.04, which indicates a correct valuation of CTSH.
Based on the Price/Forward Earnings ratio, CTSH is valued cheaper than 80.95% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 20.41. CTSH is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.53 | ||
| Fwd PE | 13.04 |
4.2 Price Multiples
76.19% of the companies in the same industry are more expensive than CTSH, based on the Enterprise Value to EBITDA ratio.
64.29% 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 | 23.56 | ||
| EV/EBITDA | 8.98 |
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)4
PEG (5Y)N/A
EPS Next 2Y5.67%
EPS Next 3Y7.24%
5. Dividend
5.1 Amount
CTSH has a Yearly Dividend Yield of 1.81%.
CTSH's Dividend Yield is rather good when compared to the industry average which is at 2.85. CTSH pays more dividend than 88.10% of the companies in the same industry.
CTSH's Dividend Yield is slightly below the S&P500 average, which is at 2.41.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.81% |
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 Years4
Div Non Decr Years6
5.3 Sustainability
28.30% of the earnings are spent on dividend by CTSH. This is a low number and sustainable payout ratio.
CTSH's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP28.3%
EPS Next 2Y5.67%
EPS Next 3Y7.24%
COGNIZANT TECH SOLUTIONS-A
NASDAQ:CTSH (5/3/2024, 7:00:01 PM)
After market: 66.25 0 (0%)66.25
-0.02 (-0.03%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap32.94B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.81% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
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Revenue beat(2)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.53 | ||
| Fwd PE | 13.04 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)4
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.36% | ||
| ROE | 15.51% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 15.2% | ||
| PM (TTM) | 10.84% | ||
| GM | 34.37% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover1.05
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.04 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 2.35 | ||
| Quick Ratio | 2.35 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)2.93%
EPS 3Y9.98%
EPS 5Y
EPS growth Q2Q
EPS Next Y3.63%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)-0.58%
Revenue growth 3Y5.14%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y