Cognizant Technology Solutions logged a 0.8% change during today's afternoon session, and is now trading at a price of $70.82 per share.
Cognizant Technology Solutions returned gains of 18.0% last year, with its stock price reaching a high of $72.71 and a low of $54.25. Over the same period, the stock outperformed the S&P 500 index by 4.0%. More recently, the company's 50-day average price was $67.2. 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 346,600 full time employees. Cognizant Technology Solutions has offered a 1.7% dividend yield over the last 12 months.
EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $16,125 | $16,783 | $16,652 | $18,507 | $19,428 | $19,394 |
| Gross Margins | 39.0% | 37.0% | 36.0% | 37.0% | 36.0% | 35.0% |
| Operating Margins | 17.0% | 15.0% | 13.0% | 15.0% | 16.0% | 15.0% |
| Net Margins | 13.0% | 11.0% | 8.0% | 12.0% | 12.0% | 11.0% |
| Net Income (MM) | $2,101 | $1,842 | $1,392 | $2,137 | $2,290 | $2,193 |
| Net Interest Expense (MM) | $27 | $90 | $24 | $9 | $48 | $88 |
| Depreciation & Amort. (MM) | $498 | $526 | $559 | $574 | $569 | $555 |
| Earnings Per Share | $3.6 | $3.29 | $2.57 | $4.05 | $4.41 | $4.28 |
| Diluted Shares (MM) | 584 | 560 | 541 | 528 | 519 | 489 |
| Free Cash Flow (MM) | $2,215 | $2,107 | $2,901 | $2,216 | $2,236 | $2,164 |
| Capital Expenditures (MM) | $377 | $392 | $398 | $279 | $332 | $335 |
| Net Current Assets (MM) | $4,188 | $2,429 | $764 | $1,481 | $1,723 | $1,887 |
| Long Term Debt (MM) | $736 | $700 | $663 | $626 | $638 | $622 |
| Net Debt / EBITDA | 0.0 | -0.42 | -0.51 | -0.14 | -0.27 | -0.25 |
Cognizant Technology Solutions has slimmer gross margins than its peers, weak operating margins with a stable trend, and EPS growth achieved by reducing the number of outstanding shares. On the other hand, the company benefits from growing revenues and a flat capital expenditure trend and low leverage. Furthermore, Cognizant Technology Solutions has irregular cash flows.
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Cognizant Technology Solutions has a trailing twelve month P/E ratio of 16.4, compared to an average of 27.16 for the Technology sector. Based on its EPS guidance of $4.64, the company has a forward P/E ratio of 14.5. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 2.9%. On this basis, the company's PEG ratio is 5.6, which suggests that it is overpriced. In contrast, the market is likely undervaluing Cognizant Technology Solutions in terms of its equity because its P/B ratio is 2.75 while the sector average is 6.23. The company's shares are currently trading 40.2% above their Graham number.
Cognizant Technology Solutions Has an Analyst Consensus of Little Upside Potential:
The 25 analysts following Cognizant Technology Solutions have set target prices ranging from $60.0 to $87.0 per share, for an average of $70.28 with a hold rating. As of April 2023, the company is trading -4.4% away from its average target price, indicating that there is an analyst consensus of little upside potential.
Cognizant Technology Solutions has a very low short interest because 1.3% of the company's shares are sold short. Institutions own 94.6% of the company's shares, and the insider ownership rate stands at 0.23%, suggesting a small amount of insider investors. The largest shareholder is Blackrock Inc., whose 12% stake in the company is worth $4,216,705,428.
