Cognizant Technology Solutions may be undervalued with mixed growth prospects, but the 24 analysts following the company give it an rating of hold. Their target prices range from $49.0 to $91.0 per share, for an average of $65.1. At today's price of $62.87, Cognizant Technology Solutions is trading -3.43% away from its average target price, suggesting there is an analyst consensus of some upside potential for the stock.
Cognizant Technology Solutions Corporation, a professional services company, provides consulting and technology, and outsourcing services in North America, Europe, and internationally. Based in Teaneck, NJ, the large-cap Technology company has 355,300 full time employees. Cognizant Technology Solutions has provided a 1.9% dividend yield over the last 12 months.
Cognizant Technology Solutions has a trailing twelve month P/E ratio of 14.3, compared to an average of 27.16 for the Technology sector. Based on its EPS guidance of 4.8, the company has a forward P/E ratio of 13.1.
The average compound growth rate of the company's historical and projected earnings per share is 7.8%. On this basis, the company's PEG ratio is 1.74, which suggests that it is overpriced.
Furthermore, the market is potentially undervaluing Cognizant Technology Solutions in terms of its book value because its P/B ratio is 2.6. In comparison, the sector average P/B ratio is 6.23. The company's shares are currently 42.4% above their Graham number, which suggests that they are not trading at a fair value in terms of earnings and net assets.
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $16,783 | $16,652 | $18,507 | $19,428 |
| Gross Margins | 36.6% | 35.9% | 37.3% | 35.9% |
| Operating Margins | 15.9% | 14.0% | 15.3% | 15.3% |
| Net Margins | 10.98% | 8.36% | 11.55% | 11.79% |
| Net Income (MM) | $1,842 | $1,392 | $2,137 | $2,290 |
| Net Interest Income | $150,000 | $95,000 | $21,000 | $40,000 |
| Depreciation & Amort. | -$507,000 | -$552,000 | -$574,000 | -$569,000 |
| Earnings Per Share | $3.29 | $2.57 | $4.05 | $4.41 |
| EPS Growth | n/a | -21.88% | 57.59% | 8.89% |
| Diluted Shares (MM) | 560 | 541 | 528 | 508 |
| Free Cash Flow (MM) | $2,107 | $2,901 | $2,216 | $2,236 |
| Capital Expenditures (MM) | -$392 | -$398 | -$279 | -$332 |
| Net Current Assets (MM) | $2,429 | $764 | $1,481 | $1,723 |
| Current Ratio | 2.55 | 1.94 | 2.08 | 2.17 |
| Long Term Debt | $700,000 | $663,000 | $626,000 | $638,000 |
| Net Debt / EBITDA | -0.54 | -0.64 | -0.27 | -0.38 |
