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Cognizant Technology Solutions Corp Class A CTSH

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Stock XNAS Rating as of
$66.25 −0.02 (0.03%)
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Company Report

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Cognizant Earnings: Improved Profitability Buttresses Results as Customer Spending Remains Muted

Malik Ahmed Khan

We are maintaining our $94 fair value estimate for narrow-moat Cognizant after the firm kicked off fiscal 2024 with a set of strong financial results marked by impressive profitability despite the tough macro conditions. Over the last few quarters, Cognizant and its IT services peers have seen a marked slowdown in discretionary customer spending amid a generally tight macro environment. Investors have homed in on this near-term weakness, dealing overly punitive damage to Cognizant's valuation. With an eye on the long term, we continue to view Cognizant as a moaty IT service vendor with a strong growth and margin profile. Despite shares trading up afterhours, we continue to view Cognizant as materially undervalued and trading in the 5-star territory.

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Price vs Fair Value

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CTSH is trading at a 30% discount.
Price
$66.25
Fair Value
$48.00
Uncertainty
Medium
1-Star Price
$611.30
5-Star Price
$17.60
Economic Moat
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Capital Allocation
Zrcrgms

Bulls Say, Bears Say

Bulls

Enterprises' spending with Cognizant should increase as the enterprise technical landscape gets more and more difficult to navigate and increasingly important in staying competitive.

Bears

Cognizant’s growth could become increasingly limited, given its vertical specialization and ongoing consolidation.

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News

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Trading Information

Previous Close Price
$66.27
Day Range
$66.16–67.27
52-Week Range
$60.26–80.09
Bid/Ask
$66.18 / $66.99
Market Cap
$32.94 Bil
Volume/Avg
7.4 Mil / 4.6 Mil

Key Statistics

Price/Earnings (Normalized)
14.53
Price/Sales
1.72
Dividend Yield (Trailing)
1.77%
Dividend Yield (Forward)
1.81%
Total Yield
4.73%

Company Profile

Cognizant is a global IT services provider, offering consulting and outsourcing services to some of the world’s largest enterprises spanning the financial services, media and communications, healthcare, natural resources, and consumer products industries. Cognizant employs nearly 300,000 people globally, roughly 70% of whom are in India, although the company’s headquarters are in Teaneck, New Jersey.
Sector
Technology
Industry
Information Technology Services
Stock Style Box
Mid Core
Total Number of Employees
344,400
Website
https://www.cognizant.com

Competitors

Valuation

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Metric
CTSH
WIT
INFY
Price/Earnings (Normalized)
 14.5320.2523.85
Price/Book Value
 2.443.386.64
Price/Sales
 1.722.633.78
Price/Cash Flow
 13.4218.0118.61
Price/Earnings
CTSH
WIT
INFY

Financial Strength

Metric
CTSH
WIT
INFY
Quick Ratio
 2.012.171.68
Current Ratio
 2.352.291.99
Interest Coverage
 62.5112.12—
Quick Ratio
CTSH
WIT
INFY

Profitability

Metric
CTSH
WIT
INFY
Return on Assets (Normalized)
 13.24%10.15%19.14%
Return on Equity (Normalized)
 18.51%16.30%32.00%
Return on Invested Capital (Normalized)
 16.28%12.16%28.86%
Return on Assets
CTSH
WIT
INFY
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