Cognizant Technology Solutions Corporation
Cognizant Technology Solutions Corporation Fundamental Analysis
Cognizant Technology Solutions Corporation (CTSH) shows moderate financial fundamentals with a PE ratio of 10.06, profit margin of 10.41%, and ROE of 14.79%. The company generates $21.3B in annual revenue with moderate year-over-year growth of 6.95%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 66.6/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze CTSH's fundamental strength across five key dimensions:
Efficiency Score
ExcellentCTSH demonstrates superior asset utilization.
Valuation Score
ExcellentCTSH trades at attractive valuation levels.
Growth Score
ModerateCTSH shows steady but slowing expansion.
Financial Health Score
ExcellentCTSH maintains a strong and stable balance sheet.
Profitability Score
WeakCTSH struggles to sustain strong margins.
Key Financial Metrics
Is CTSH Expensive or Cheap?
P/E Ratio
CTSH trades at 10.06 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, CTSH's PEG of -3.41 indicates potential undervaluation.
Price to Book
The market values Cognizant Technology Solutions Corporation at 1.49 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 5.66 times EBITDA. This is generally considered low.
How Well Does CTSH Make Money?
Net Profit Margin
For every $100 in sales, Cognizant Technology Solutions Corporation keeps $10.41 as profit after all expenses.
Operating Margin
Core operations generate 15.66 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $14.79 in profit for every $100 of shareholder equity.
ROA
Cognizant Technology Solutions Corporation generates $10.87 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Cognizant Technology Solutions Corporation produces operating cash flow of $2.74B, showing steady but balanced cash generation.
Free Cash Flow
Cognizant Technology Solutions Corporation generates strong free cash flow of $2.45B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $5.18 in free cash annually.
FCF Yield
CTSH converts 11.06% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
10.06
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-3.41
vs 25 benchmark
P/B Ratio
Price to book value ratio
1.49
vs 25 benchmark
P/S Ratio
Price to sales ratio
1.04
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.07
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.23
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.15
vs 25 benchmark
ROA
Return on assets percentage
0.11
vs 25 benchmark
ROCE
Return on capital employed
0.20
vs 25 benchmark
How CTSH Stacks Against Its Sector Peers
| Metric | CTSH Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 10.06 | 36.74 | Better (Cheaper) |
| ROE | 14.79% | 968.00% | Weak |
| Net Margin | 10.41% | 5945062585.00% | Weak |
| Debt/Equity | 0.07 | 0.34 | Strong (Low Leverage) |
| Current Ratio | 2.23 | 4.94 | Strong Liquidity |
| ROA | 10.87% | -296476.00% (disorted) | Strong |
CTSH outperforms its industry in 4 out of 6 key metrics, particularly excelling in ROA, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Cognizant Technology Solutions Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
42.31%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
79.85%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
-1.89%
Industry Style: Growth, Innovation, High Beta
Declining