10Y annualized return is
positive but below market average
at 2.3% per year
CTSH has met or exceeded earnings expectations in
most
recent quarters (9/10)
Attractive P/E Ratio
Reasonable Price-to-Sales Ratio
Strong Return on Equity
Healthy Profit Margins
Low Debt Levels
Strong Liquidity Position
Strong Revenue Growth and Margins
Strategic Acquisitions and Partnerships
Advancements in AI Capabilities
Positive Growth Guidance for 2025
Focus on AI and Innovation
High Price-to-Cash Flow Ratio
Challenges in Certain Segments
Cautious Discretionary Spending
Cognizant Technology Solutions demonstrated strong operational performance in 2024, driven by revenue growth, strategic acquisitions, and advancements in AI capabilities. However, challenges in certain segments and cautious discretionary spending pose risks. Looking ahead, the company has a positive growth outlook for 2025, supported by ongoing investments in AI and modernization efforts.
Analysis Date: February 5, 2025
Last Updated: March 11, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Cognizant Technology Solutions is a company that helps other businesses improve their operations using technology. They offer services like consulting and outsourcing, which means they provide expert advice and help businesses get work done more efficiently. Cognizant works in various areas, including finance, healthcare, and media, helping companies with things like digital payments, health services, and improving customer experiences. Founded in 1994, they are based in Teaneck, New Jersey, and serve clients all around the world.
Streams of revenue
Geographic Distribution
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$174.22
Current Market Price: $68.69
IV/P Ratio: 2.54x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
61.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for CTSH
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (15.19)
P/B ratio ≤ 1.5 (2.36)
Current ratio ≥ 2.0 (2.09x)
Long-term debt < Net current assets (0.33x)
Margin of safety (61.0%)
CTSH does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
15.93%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
32.35%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
11.35%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
The return on equity (ROE) of 15.93% demonstrates that the company is effectively using its equity to generate profits, indicating solid management performance.
The net profit margin of 11.35% reflects good profitability, indicating that the company retains a significant portion of revenue as profit.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.10x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
2.09x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
The debt-to-equity ratio of 0.10 and debt-to-assets ratio of 0.07 indicate that the company maintains a conservative capital structure with low reliance on debt.
With a current ratio of 2.09 and a quick ratio of 2.09, the company is well-positioned to meet its short-term liabilities, providing a strong liquidity buffer.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Cognizant reported a revenue of $5.1 billion for Q4 2024, reflecting a year-over-year growth of 6.7% in constant currency. The adjusted operating margin improved to 15.7%, indicating strong operational execution and cost management.
The company made significant acquisitions, such as Thirdera and Belcan, enhancing its market position and capabilities. These acquisitions have contributed to entry into high-growth markets.
Cognizant's investments in AI led to significant advancements in offerings, including AI-powered platforms like Neuro AI and Flowsource, which position the company as a leader in AI integration for enterprise solutions.
The Products & Resources segment faced pressure from cautious discretionary spending across industries such as automotive and aerospace, which could impact future growth.
Cognizant expects revenue growth of 2.6% to 5.1% for the full year 2025, indicating optimism driven by improved discretionary spending and a strong pipeline.
The company is heavily investing in AI and modernizing operations, which could lead to enhanced productivity and new service pools. This positions Cognizant well for future opportunities as AI adoption expands.
Despite improvements, discretionary spending remains cautious, particularly in certain sectors, which may limit growth potential in the near term.