Cognizant (CTSH) AI Stock Analysis

• Market Cap: $29.20B
• Dividend Yield: 1.46%
• Average Volume (3M): 6.92M
• Price to Earnings (P/E): 13.4
• Beta (1Y): 0.88
• Revenue Growth: 7.44%
• EPS Growth: -4.57%
• Country: US
• Employees: 336,300
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 1.35
• Shares Outstanding: 478,246,920
• 10 Day Avg. Volume: 9,415,216
• 30 Day Avg. Volume: 6,918,313
• PEG Ratio: 20.23
• Price to Book (P/B): 2.66
• Price to Sales (P/S): 1.89
• P/FCF Ratio: 15.38
• Enterprise Value/Market Cap: 1.00
• Enterprise Value/Revenue: 1.39
• Enterprise Value/Gross Profit: 4.20
• Enterprise Value/Ebitda: 7.20
• 1Y Price Target: $92.07
• Price Target Upside: 50.12% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 17
• EPS Forecast (FY): 5.65
• Revenue Forecast (FY): $22.40B

• Rating: 68 Neutral
• Price Target: $67.00 ▲(9.25% Upside)
• Action: Downgraded Date: 02/27/26
• Date: Action: Downgraded 02/27/26

CTSH scores as a moderately attractive setup driven by strong financial stability (low leverage, solid profitability) and supportive valuation (low P/E with a dividend). Offsetting these positives, technicals are notably bearish with the stock well below major moving averages and negative momentum, while the latest guidance suggests steady—but not accelerating—growth with limited margin expansion.

Positive Factors

Low Leverage / Strong Balance Sheet

Very low debt-to-equity (~0.08) gives durable financial flexibility for funding M&A, sustaining buybacks/dividends, and weathering cyclical IT spending downturns. A strong balance sheet reduces refinancing risk and preserves strategic optionality over the next 2–6 months.

Large-deal Momentum & Contract Wins

Sustained large-deal pipeline (book-to-bill ~1.3, more mega deals and rising TCV) improves revenue visibility and contract stickiness. Longer-duration, larger contracts support recurring revenue, better utilization of scale, and lessen reliance on volatile small deals over a multi-quarter horizon.

Strong Cash Generation & Capital Returns

Consistent high absolute OCF and FCF (FCF ~90% of net income) support sustainable shareholder returns and reinvestment. Robust cash conversion underpins buybacks, dividends, and M&A without stressing liquidity, a durable positive for capital allocation and strategic execution.

Negative Factors

Modest & Uneven Revenue Growth

Top-line momentum is uneven and modest, with organic growth constrained. Reliance on inorganic boosts and large-deal timing raises execution risk; absent sustained acceleration, revenue mix and margin leverage may stay muted across the next several quarters.

Margin Pressure from Compensation and Mix

Rising variable compensation, elevated bonuses and acquisitions with on-site, lower-margin profiles compress gross margins. These structural cost and mix pressures limit margin expansion potential, requiring operational productivity gains to offset wage inflation over coming quarters.

India Labor Code Impact & Benefit Costs

Implementation of parts of India’s labor code created a permanent increase in defined benefit liabilities and ongoing expense pressure. As India is a core delivery base, higher statutory costs and non-operating charges are a structural headwind to margins and cash flow dynamics.

Cognizant Business Overview & Revenue Model

Company Description

Cognizant Technology Solutions Corporation, a professional services company, provides consulting and technology, and outsourcing services in North America, Europe, and internationally. It operates through four segments: Financial Services; Healthcare; Products and Resources; and Communications, Media and Technology. The company offers customer experience enhancement, robotic process automation, analytics, and AI services in areas, such as digital lending, fraud detection, and next generation payments; the shift towards consumerism, outcome-based contracting, digital health, delivering integrated seamless, omni-channel, and patient-centered experience; and services that drive operational improvements in areas, such as clinical development, pharmacovigilance, and manufacturing, as well as claims processing, enrollment, membership, and billing to healthcare providers and payers, and life sciences companies, including pharmaceutical, biotech, and medical device companies. It also provides solution to manufacturers, retailers and travel and hospitality companies, as well as companies providing logistics, energy and utility services; and digital content, the creation of personalized user experience, and acceleration of digital engineering services to information, media and entertainment, and communications and technology companies. The company was founded in 1994 and is headquartered in Teaneck, New Jersey.

How the Company Makes Money

Cognizant generates revenue through several key streams, primarily from providing IT services and consulting. The company employs a time-and-materials model as well as fixed-price contracts, allowing it to charge clients based on the project scope and duration. Major revenue sources include software development and maintenance, IT infrastructure management, and digital services such as cloud computing and data analytics. Additionally, Cognizant has formed strategic partnerships with technology leaders like Microsoft, AWS, and Salesforce, which enhance its service offerings and broaden its market reach. The company also benefits from recurring revenue through long-term contracts with clients, ensuring a steady income stream. Overall, Cognizant's ability to adapt to evolving technology trends and its focus on digital services significantly contribute to its financial performance.

Cognizant Financial Statement Overview

Summary

Financially solid and stable: strong balance sheet with very low leverage (debt-to-equity ~0.08) and healthy ROE (~14.8%). Profitability remains resilient (TTM net margin ~10.6%, EBIT margin ~17.2%), but revenue growth is modest and margins/cash conversion have softened recently (OCF below net income coverage ~0.79; TTM FCF growth ~-2.1%).

Income Statement

CTSH shows solid, steady profitability with TTM (Trailing-Twelve-Months) net margin around 10.6% and EBIT margin around 17.2%, indicating resilient operating performance for an IT services model. Revenue growth is positive in TTM (about +1.2%) and 2024 (+~2.0%), but overall top-line momentum remains modest and has been uneven over the last several years. A key watch item is margin compression versus prior years, with gross and net margins trending down from 2021–2022 levels, suggesting pricing pressure and/or higher delivery costs.

Balance Sheet

The balance sheet is a clear strength: leverage is low with TTM (Trailing-Twelve-Months) debt-to-equity around 0.08, improving versus recent years and providing financial flexibility. Equity has grown over time, and returns on equity remain healthy (about 14.8% in TTM and ~15.5% in 2024), supporting a high-quality capital structure. The main drawback is a gradual decline in returns versus the 2021–2022 peak, implying profitability gains have not fully kept pace with the expanding equity base.

Cash Flow

Cash generation is strong in absolute terms (TTM operating cash flow about $2.9B and free cash flow about $2.6B), and free cash flow tracks earnings reasonably well (TTM free cash flow at ~90% of net income). However, cash conversion softened in TTM, with operating cash flow running below net income (coverage ~0.79), and free cash flow growth is negative in TTM (about -2.1%) and also slightly negative in 2024. Overall, the company remains a solid cash producer, but recent conversion and growth trends are less favorable than prior periods.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	21.11B	19.74B	19.35B	19.43B	18.51B
Gross Profit	7.12B	6.78B	6.69B	6.98B	6.90B
EBITDA	4.17B	3.53B	3.38B	3.60B	3.41B
Net Income	2.23B	2.24B	2.13B	2.29B	2.14B
Balance Sheet
Total Assets	20.69B	19.97B	18.48B	17.85B	17.85B
Cash, Cash Equivalents and Short-Term Investments	1.91B	2.24B	2.63B	2.50B	2.72B
Total Debt	1.57B	1.50B	1.31B	1.53B	1.64B
Total Liabilities	5.68B	5.56B	5.26B	5.54B	5.86B
Stockholders Equity	15.02B	14.41B	13.23B	12.31B	11.99B
Cash Flow
Free Cash Flow	2.60B	1.83B	2.01B	2.24B	2.22B
Operating Cash Flow	2.88B	2.12B	2.33B	2.57B	2.50B
Investing Cash Flow	-230.00M	-1.65B	-331.00M	-106.00M	-2.16B
Financing Cash Flow	-2.27B	-915.00M	-1.61B	-1.94B	-1.20B

Cognizant Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 61.33
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CTSH, the sentiment is Negative. The current price of 61.33 is below the 20-day moving average (MA) of 71.42, below the 50-day MA of 78.95, and below the 200-day MA of 74.66, indicating a bearish trend. The MACD of -5.25 indicates Positive momentum. The RSI at 23.48 is Positive, neither overbought nor oversold. The STOCH value of 6.67 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CTSH.

Cognizant Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
INFY	80 Outperform	$56.96B	17.83	32.85%	2.58%	4.62%	1.06%
ACN	77 Outperform	$121.05B	16.26	25.35%	2.25%	6.58%	1.19%
CTSH	68 Neutral	$29.20B	13.39	15.16%	1.46%	7.44%	-4.57%
FISV	68 Neutral	$31.62B	9.72	13.17%	―	5.16%	24.92%
WIT	66 Neutral	$23.08B	14.71	15.82%	2.78%	-1.97%	48.61%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
FIS	61 Neutral	$24.91B	66.12	2.58%	2.40%	4.26%	-75.98%

Cognizant Corporate Events

Cognizant Elevates Ayyar to Lead Asia Pacific Operations

On February 23, 2026, Cognizant announced that Balu Ganesh Ayyar transitioned from his prior role as President of Intuitive Operations and Automation and Industry Solutions to become President of the Asia Pacific & Japan and Industry Solutions Group. The move signals a strategic emphasis on strengthening Cognizant’s leadership and execution capabilities in the high‑growth Asia Pacific and Japan region while maintaining continuity in its industry solutions portfolio.

The most recent analyst rating on (CTSH) stock is a Buy with a $69.00 price target. To see the full list of analyst forecasts on Cognizant stock, see the CTSH Stock Forecast page.

Cognizant outlines 2026 growth outlook and capital returns

On February 4, 2026, Cognizant reported that fourth-quarter 2025 revenue climbed 4.9% to $5.3 billion while full-year sales rose 7% to $21.1 billion, aided by Belcan’s contribution and momentum in AI-led large deals, with operating margins, adjusted EPS, and cash conversion all improving; the company returned $2 billion to shareholders via buybacks and dividends and booked $28.4 billion in trailing-twelve-month contracts with rising headcount and lower attrition. Management guided 2026 revenue growth of 4.9%-7.4% and adjusted operating margin of 15.9%-16.1%, planning $1.6 billion in capital returns as it leans on AI investments, new client agreements such as Bupa Hong Kong and Kohler, and a larger dividend to sustain competitive positioning.

The most recent analyst rating on (CTSH) stock is a Hold with a $80.00 price target. To see the full list of analyst forecasts on Cognizant stock, see the CTSH Stock Forecast page.