COGNIZANT TECH SOLUTIONS-A (CTSH) Stock Fundamental Analysis
USA - NASDAQ:CTSH - US1924461023 - Common Stock
67.66 USD
+0.66 (+0.99%)
67.66 USD
0 (0%)
Overall CTSH gets a fundamental rating of 7 out of 10. We evaluated CTSH against 86 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. A decent growth rate in combination with a cheap valuation! Better keep an eye on CTSH. These ratings could make CTSH a good candidate for value and quality investing.
1. Profitability
1.1 Basic Checks
In the past year CTSH was profitable.
CTSH had a positive operating cash flow in the past year.
CTSH had positive earnings in each of the past 5 years.
CTSH had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
CTSH has a Return On Assets of 12.08%. This is amongst the best in the industry. CTSH outperforms 91.86% of its industry peers.
Looking at the Return On Equity, with a value of 15.93%, CTSH is in the better half of the industry, outperforming 77.91% of the companies in the same industry.
CTSH has a Return On Invested Capital of 14.18%. This is amongst the best in the industry. CTSH outperforms 87.21% 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 21.42%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.08% | ||
| ROE | 15.93% | ||
| ROIC | 14.18% |
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 better Profit Margin (11.89%) than 83.72% of its industry peers.
In the last couple of years the Profit Margin of CTSH has remained more or less at the same level.
Looking at the Operating Margin, with a value of 15.52%, CTSH belongs to the top of the industry, outperforming 82.56% of the companies in the same industry.
CTSH's Operating Margin has been stable in the last couple of years.
CTSH has a Gross Margin (34.18%) 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 | 15.52% | ||
| PM (TTM) | 11.89% | ||
| GM | 34.18% |
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.
Compared to 1 year ago, CTSH has a worse debt to assets ratio.
2.2 Solvency
CTSH has an Altman-Z score of 6.92. This indicates that CTSH is financially healthy and has little risk of bankruptcy at the moment.
CTSH has a Altman-Z score of 6.92. This is amongst the best in the industry. CTSH outperforms 81.40% of its industry peers.
The Debt to FCF ratio of CTSH is 0.26, which is an excellent value as it means it would take CTSH, only 0.26 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.26, CTSH belongs to the top of the industry, outperforming 90.70% of the companies in the same industry.
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 73.26% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.04 | ||
| Debt/FCF | 0.26 | ||
| Altman-Z | 6.92 |
ROIC/WACC1.63
WACC8.68%
2.3 Liquidity
CTSH has a Current Ratio of 2.41. This indicates that CTSH is financially healthy and has no problem in meeting its short term obligations.
With a decent Current ratio value of 2.41, CTSH is doing good in the industry, outperforming 73.26% of the companies in the same industry.
CTSH has a Quick Ratio of 2.41. This indicates that CTSH is financially healthy and has no problem in meeting its short term obligations.
CTSH has a better Quick ratio (2.41) than 73.26% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.41 | ||
| Quick Ratio | 2.41 |
3. Growth
3.1 Past
CTSH shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.99%.
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.
Looking at the last year, CTSH shows a small growth in Revenue. The Revenue has grown by 6.34% 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)7.99%
EPS 3Y4.86%
EPS 5Y3.5%
EPS Q2Q%11.97%
Revenue 1Y (TTM)6.34%
Revenue growth 3Y2.17%
Revenue growth 5Y3.29%
Sales Q2Q%8.14%
3.2 Future
The Earnings Per Share is expected to grow by 9.47% 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 5.30% on average per year.
EPS Next Y9.89%
EPS Next 2Y9.03%
EPS Next 3Y8.93%
EPS Next 5Y9.47%
Revenue Next Year6.24%
Revenue Next 2Y5.46%
Revenue Next 3Y5.71%
Revenue Next 5Y5.3%
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 13.53, which indicates a correct valuation of CTSH.
CTSH's Price/Earnings ratio is rather cheap when compared to the industry. CTSH is cheaper than 82.56% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.86, CTSH is valued rather cheaply.
CTSH is valuated reasonably with a Price/Forward Earnings ratio of 11.98.
CTSH's Price/Forward Earnings ratio is rather cheap when compared to the industry. CTSH is cheaper than 80.23% of the companies in the same industry.
CTSH's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 23.32.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.53 | ||
| Fwd PE | 11.98 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CTSH is valued cheaper than 83.72% of the companies in the same industry.
CTSH's Price/Free Cash Flow ratio is rather cheap when compared to the industry. CTSH is cheaper than 80.23% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.48 | ||
| EV/EBITDA | 8.53 |
4.3 Compensation for Growth
CTSH's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of CTSH may justify a higher PE ratio.
PEG (NY)1.37
PEG (5Y)3.87
EPS Next 2Y9.03%
EPS Next 3Y8.93%
5. Dividend
5.1 Amount
CTSH has a Yearly Dividend Yield of 1.85%.
Compared to an average industry Dividend Yield of 2.48, CTSH pays a better dividend. On top of this CTSH pays more dividend than 88.37% 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 | 1.85% |
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
24.92% of the earnings are spent on dividend by CTSH. This is a low number and sustainable payout ratio.
CTSH's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP24.92%
EPS Next 2Y9.03%
EPS Next 3Y8.93%
67.66
+0.66 (+0.99%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners101.96%
Inst Owner Change0%
Ins Owners0.1%
Ins Owner Change1.05%
Market Cap33.05B
Analysts71.88
Price Target88.44 (30.71%)
Short Float %5.61%
Short Ratio6.34
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.85% |
Yearly Dividend1.21
Dividend Growth(5Y)8.46%
DP24.92%
Div Incr Years5
Div Non Decr Years7
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)1.25%
Min EPS beat(2)0.64%
Max EPS beat(2)1.85%
EPS beat(4)4
Avg EPS beat(4)3.77%
Min EPS beat(4)0.64%
Max EPS beat(4)6.84%
EPS beat(8)7
Avg EPS beat(8)4.16%
EPS beat(12)9
Avg EPS beat(12)3.54%
EPS beat(16)12
Avg EPS beat(16)3.16%
Revenue beat(2)0
Avg Revenue beat(2)-1.35%
Min Revenue beat(2)-1.82%
Max Revenue beat(2)-0.87%
Revenue beat(4)0
Avg Revenue beat(4)-1.37%
Min Revenue beat(4)-1.82%
Max Revenue beat(4)-0.87%
Revenue beat(8)0
Avg Revenue beat(8)-1.47%
Revenue beat(12)0
Avg Revenue beat(12)-1.55%
Revenue beat(16)0
Avg Revenue beat(16)-1.63%
PT rev (1m)-0.5%
PT rev (3m)-0.2%
EPS NQ rev (1m)0%
EPS NQ rev (3m)1.17%
EPS NY rev (1m)0.08%
EPS NY rev (3m)0.93%
Revenue NQ rev (1m)-0.04%
Revenue NQ rev (3m)0.97%
Revenue NY rev (1m)0.03%
Revenue NY rev (3m)0.73%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.53 | ||
| Fwd PE | 11.98 | ||
| P/S | 1.61 | ||
| P/FCF | 14.48 | ||
| P/OCF | 12.88 | ||
| P/B | 2.16 | ||
| P/tB | 4.97 | ||
| EV/EBITDA | 8.53 |
EPS(TTM)5
EY7.39%
EPS(NY)5.65
Fwd EY8.35%
FCF(TTM)4.67
FCFY6.91%
OCF(TTM)5.25
OCFY7.76%
SpS41.95
BVpS31.3
TBVpS13.61
PEG (NY)1.37
PEG (5Y)3.87
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.08% | ||
| ROE | 15.93% | ||
| ROCE | 18.69% | ||
| ROIC | 14.18% | ||
| ROICexc | 15.87% | ||
| ROICexgc | 36.79% | ||
| OM | 15.52% | ||
| PM (TTM) | 11.89% | ||
| GM | 34.18% | ||
| FCFM | 11.14% |
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 Turnover1.02
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.04 | ||
| Debt/FCF | 0.26 | ||
| Debt/EBITDA | 0.15 | ||
| Cap/Depr | 51.36% | ||
| Cap/Sales | 1.38% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 68.77% | ||
| Profit Quality | 93.68% | ||
| Current Ratio | 2.41 | ||
| Quick Ratio | 2.41 | ||
| Altman-Z | 6.92 |
F-Score6
WACC8.68%
ROIC/WACC1.63
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)7.99%
EPS 3Y4.86%
EPS 5Y3.5%
EPS Q2Q%11.97%
EPS Next Y9.89%
EPS Next 2Y9.03%
EPS Next 3Y8.93%
EPS Next 5Y9.47%
Revenue 1Y (TTM)6.34%
Revenue growth 3Y2.17%
Revenue growth 5Y3.29%
Sales Q2Q%8.14%
Revenue Next Year6.24%
Revenue Next 2Y5.46%
Revenue Next 3Y5.71%
Revenue Next 5Y5.3%
EBIT growth 1Y6.79%
EBIT growth 3Y2.07%
EBIT growth 5Y2.53%
EBIT Next Year28.81%
EBIT Next 3Y13.14%
EBIT Next 5Y9.54%
FCF growth 1Y5.45%
FCF growth 3Y-6.23%
FCF growth 5Y-2.81%
OCF growth 1Y2.64%
OCF growth 3Y-5.22%
OCF growth 5Y-3.2%