Cognizant (CTSH) AI Stock Analysis

• Market Cap: $37.82B
• Dividend Yield: 1.59%
• Average Volume (3M): 3.35M
• Price to Earnings (P/E): 16.2
• Beta (1Y): 0.85
• Revenue Growth: 4.09%
• EPS Growth: 14.05%
• Country: US
• Employees: 336,300
• Sector: Technology
• Sector Strength: 90
• Industry: Information Technology Services
• EPS (TTM): 1.23
• Shares Outstanding: 492,941,960
• 10 Day Avg. Volume: 3,114,628
• 30 Day Avg. Volume: 3,354,351
• PEG Ratio: 3.02
• Price to Book (P/B): 2.54
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 17.73
• Enterprise Value/Market Cap: 0.98
• Enterprise Value/Revenue: 0.74
• Enterprise Value/Gross Profit: 7.75
• Enterprise Value/Ebitda: 3.71
• 1Y Price Target: $89.81
• Price Target Upside: 17.14% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 18

• Rating: 78 Outperform
• Price Target: $92.00 ▲(19.99%Upside)

Cognizant's strong financial performance and positive outlook from the earnings call are significant factors in the stock's score. While the technical analysis suggests some caution due to potential bearish momentum, the company's strategic focus on AI and robust financial health provide a solid foundation for future growth. The valuation is fair, offering moderate growth potential with income from dividends.

Positive Factors

AI Initiatives

Progress from internal AI initiatives with around 20% of software code AI-generated contributes to improving organic growth trends.

Deal Momentum

Strong deal momentum continues, signing ten deals in 4Q24 with a total contract value of USD100mn or more.

Earnings

Cognizant reported first-quarter results and second-quarter guidance that beat Street expectations and reiterated full year 2025 guidance on a constant-currency basis.

Negative Factors

Client Decision Slowdown

A slowdown in client decision-making and discretionary spend began due to macroeconomic factors.

Financial Services Downturn

Continuous downturn in the financial services segment poses a risk due to decreased discretionary spending on small deals.

Macroeconomic Risks

The potential global recession could disrupt business activities, potentially leading to layoffs and impacting growth.

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 makes money primarily through providing IT services, consulting, and business process outsourcing. Its revenue model is largely driven by long-term contracts with clients across various industries, including healthcare, financial services, and manufacturing. The company earns revenue by delivering digital solutions, application development and management, systems integration, and consulting services. Additionally, Cognizant generates income through strategic partnerships and collaborations to enhance its service offerings and expand its market reach. The company's earnings are influenced by global digital transformation trends and the increasing demand for technology-driven business solutions.

Cognizant Financial Statement Overview

Summary

Cognizant exhibits strong financial health with consistent revenue growth, strong profitability margins, a solid balance sheet with low leverage, and robust cash flow generation. The company has shown operational efficiency with strong EBIT and EBITDA margins. However, maintaining revenue growth momentum will be crucial to sustain its financial performance.

Income Statement

Cognizant has shown consistent revenue growth, with a TTM revenue of $20.09 billion compared to $19.74 billion in the previous year, marking a growth rate of 1.8%. The gross profit margin stands at 32.95%, indicating efficient cost management. Net profit margin has also remained strong at 11.73%, reflecting solid profitability. The EBIT and EBITDA margins are robust at 15.33% and 16.13%, respectively, showcasing operational efficiency.

Balance Sheet

The balance sheet reveals a strong equity position with a debt-to-equity ratio of 0.08, suggesting low leverage and financial stability. The return on equity (ROE) is a healthy 15.82%, indicating effective use of equity to generate profits. The equity ratio is 74.60%, highlighting a strong capital structure with significant equity backing.

Cash Flow

Cognizant's cash flow is robust, with a TTM operating cash flow of $2.43 billion translating to an operating cash flow to net income ratio of 1.03. The free cash flow growth rate has been 16.77% year-over-year, demonstrating strong cash generation. The free cash flow to net income ratio of 0.90 reflects solid conversion of profits into cash.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	19.74B	19.35B	19.43B	18.51B	16.65B
Gross Profit	6.78B	6.69B	6.98B	6.90B	5.98B
EBITDA	3.52B	3.35B	3.60B	3.41B	2.68B
Net Income	2.24B	2.13B	2.29B	2.14B	1.39B
Balance Sheet
Total Assets	19.97B	18.48B	17.85B	17.85B	16.92B
Cash, Cash Equivalents and Short-Term Investments	2.24B	2.63B	2.50B	2.72B	2.72B
Total Debt	1.50B	1.31B	1.53B	1.64B	1.76B
Total Liabilities	5.56B	5.26B	5.54B	5.86B	6.09B
Stockholders Equity	14.41B	13.23B	12.31B	11.99B	10.84B
Cash Flow
Free Cash Flow	1.83B	2.01B	2.24B	2.22B	2.90B
Operating Cash Flow	2.12B	2.33B	2.57B	2.50B	3.30B
Investing Cash Flow	-1.65B	-331.00M	-106.00M	-2.16B	-1.24B
Financing Cash Flow	-915.00M	-1.61B	-1.94B	-1.20B	-2.01B

Cognizant Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 76.67
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 76.67 is below the 20-day moving average (MA) of 77.46, below the 50-day MA of 78.81, and below the 200-day MA of 78.26, indicating a bearish trend. The MACD of -0.66 indicates Negative momentum. The RSI at 46.44 is Neutral, neither overbought nor oversold. The STOCH value of 80.20 is Negative, 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
CTSH	78 Outperform	$37.82B	16.15	16.61%	1.59%	4.09%	14.05%
ACN	77 Outperform	$175.46B	22.77	27.27%	2.09%	6.21%	14.87%
INFY	75 Outperform	$74.61B	22.87	30.46%	2.92%	4.52%	-0.22%
EPAM	74 Outperform	$9.57B	23.62	11.57%	―	4.72%	-3.06%
IT	72 Outperform	$27.41B	22.18	113.19%	―	5.99%	59.74%
WIT	71 Outperform	$31.71B	22.52	16.50%	0.29%	-1.95%	62.75%
Sector *	63 Neutral	$34.70B	5.15	-11.38%	1.67%	5.54%	-17.15%

Cognizant Corporate Events

Cognizant Shareholders Re-elect Directors, Approve Proposals

On June 3, 2025, Cognizant held its annual meeting of shareholders, where all directors were re-elected, and proposals on executive compensation and the appointment of an independent accounting firm were approved. However, a shareholder proposal regarding the improvement of special shareholder meetings was not approved, indicating a mixed reception to governance changes among stakeholders.

The most recent analyst rating on (CTSH) stock is a Buy with a $90.00 price target. To see the full list of analyst forecasts on Cognizant stock, see the CTSH Stock Forecast page.

Cognizant Announces Leadership Transition with New CAO

Cognizant Technology Solutions Corporation announced that Robert Telesmanic will retire from his role as SVP, Controller and Chief Accounting Officer effective July 1, 2025. Alina Kerdman, who has been with the company since 2010, will succeed him in this role. Kerdman will receive a comprehensive compensation package, including a base salary, cash incentives, and stock units, as she transitions into her new position. Telesmanic will remain with the company as a special advisor until the end of 2025 to ensure a smooth transition.

The most recent analyst rating on (CTSH) stock is a Buy with a $90.00 price target. To see the full list of analyst forecasts on Cognizant stock, see the CTSH Stock Forecast page.

Cognizant Reports Strong Q1 2025 Financial Results

Cognizant reported strong financial results for the first quarter of 2025, with revenue reaching $5.1 billion, a 7.5% increase year-over-year, and an operating margin of 16.7%. The company also announced a 22% increase in GAAP EPS and a 10% rise in adjusted EPS. Cognizant’s strategic focus on AI-led transformation and operational efficiency has positioned it well in the market, as evidenced by significant client agreements and platform enhancements. The company plans to return $1.7 billion to shareholders in 2025 through buybacks and dividends, while maintaining flexibility for growth investments.