Cognizant (CTSH) AI Stock Analysis

• Market Cap: $36.03B
• Dividend Yield: 1.72%
• Average Volume (3M): 4.46M
• Price to Earnings (P/E): 17.3
• Beta (1Y): 0.93
• Revenue Growth: 7.44%
• EPS Growth: -4.57%
• Country: US
• Employees: 336,300
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 1.39
• Shares Outstanding: 482,646,480
• 10 Day Avg. Volume: 6,198,059
• 30 Day Avg. Volume: 4,455,614
• PEG Ratio: 2.31
• Price to Book (P/B): 2.65
• Price to Sales (P/S): 1.93
• P/FCF Ratio: 20.88
• Enterprise Value/Market Cap: 0.87
• Enterprise Value/Revenue: 1.51
• Enterprise Value/Gross Profit: 4.43
• Enterprise Value/Ebitda: 7.99
• 1Y Price Target: $84.42
• Price Target Upside: 15.91% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14
• EPS Forecast (FY): 5.18
• Revenue Forecast (FY): $21.08B

• Rating: 80 Outperform
• Price Target: $82.00 ▲(12.59% Upside)

Cognizant's strong financial performance and positive earnings call insights are the most significant factors driving the score. The company's strategic focus on AI and innovation, along with solid financial health, positions it well for future growth. Technical indicators suggest short-term bullish momentum, although longer-term resistance remains. Valuation metrics indicate the stock is reasonably priced.

Positive Factors

Revenue Growth

Consistent revenue growth over five consecutive quarters indicates strong market demand and effective business strategies, supporting long-term expansion.

AI and Productivity Gains

AI-driven productivity improvements enhance operational efficiency, positioning Cognizant as a leader in tech innovation and boosting competitive advantage.

Partnerships and Innovation

Strategic partnerships and innovation initiatives strengthen Cognizant's market position, fostering growth and enhancing service offerings in the AI domain.

Negative Factors

Geopolitical Uncertainty

Geopolitical uncertainties can lead to reduced client spending and project delays, potentially impacting revenue growth and strategic planning.

Bookings Decline

A decline in bookings suggests potential future revenue challenges, as it may indicate weakening demand or competitive pressures in the market.

Impact of U.S. Policy Changes

Policy changes leading to significant tax expenses can affect net income and cash flow, impacting financial flexibility and investment capacity.

Cognizant Business Overview & Revenue Model

Company Description

Cognizant Technology Solutions Corporation (CTSH) is a multinational technology company that provides IT services, including digital, technology, consulting, and operations services. Founded in 1994 and headquartered in Teaneck, New Jersey, Cognizant operates primarily in the information technology services sector. The company serves a wide range of industries, including financial services, healthcare, manufacturing, retail, and telecommunications, offering solutions that help clients improve their business performance through technology.

How the Company Makes Money

Cognizant makes money primarily through its diverse range of IT services and consulting offerings. The company's revenue model is based on providing project-based and managed services, as well as ongoing maintenance and support contracts. Key revenue streams include consulting services, application development and management, digital strategy and solutions, and IT infrastructure services. Additionally, Cognizant generates revenue through long-term contracts with clients, often involving multi-year engagements that ensure a steady income stream. The company has also established significant partnerships with major technology providers, which enhance its service offerings and allow it to deliver integrated solutions to clients. Client retention and the expansion of existing contracts further contribute to Cognizant's earnings.

Cognizant Financial Statement Overview

Summary

Cognizant demonstrates strong financial health with consistent profitability, efficient operations, and a solid balance sheet. The company maintains low leverage and generates healthy cash flows, positioning it well for future growth. Minor concerns include declining equity and slight pressure on margins.

Income Statement

Cognizant's income statement reflects strong profitability with a consistent gross profit margin around 34% and a net profit margin above 10% in recent years. The company has shown positive revenue growth, albeit modest, with a TTM revenue growth rate of 1.81%. The EBIT and EBITDA margins indicate efficient operational management, maintaining healthy levels above 15% and 17% respectively. However, the slight decline in gross profit margin over the years suggests some pressure on cost management.

Balance Sheet

The balance sheet shows a robust financial position with a low debt-to-equity ratio of 0.08 in the TTM period, indicating low leverage and financial risk. Return on equity remains strong at 14.31%, showcasing effective use of equity to generate profits. The equity ratio is healthy, reflecting a solid capital structure. However, the decline in stockholders' equity over time could be a point of concern if it continues.

Cash Flow

Cognizant's cash flow statement reveals a solid operating cash flow to net income ratio of 0.86, indicating good cash generation relative to net income. The free cash flow has grown significantly in the TTM period by 16.17%, suggesting improved cash management. However, the free cash flow to net income ratio has slightly decreased, which could indicate increased capital expenditures or other cash outflows.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	20.86B	19.74B	19.35B	19.43B	18.51B	16.65B
Gross Profit	7.10B	6.78B	6.69B	6.98B	6.90B	5.98B
EBITDA	3.94B	3.53B	3.38B	3.60B	3.41B	2.68B
Net Income	2.13B	2.24B	2.13B	2.29B	2.14B	1.39B
Balance Sheet
Total Assets	20.13B	19.97B	18.48B	17.85B	17.85B	16.92B
Cash, Cash Equivalents and Short-Term Investments	2.35B	2.24B	2.63B	2.50B	2.72B	2.72B
Total Debt	1.17B	1.50B	1.31B	1.53B	1.64B	1.76B
Total Liabilities	5.24B	5.56B	5.26B	5.54B	5.86B	6.09B
Stockholders Equity	14.90B	14.41B	13.23B	12.31B	11.99B	10.84B
Cash Flow
Free Cash Flow	2.65B	1.83B	2.01B	2.24B	2.22B	2.90B
Operating Cash Flow	2.94B	2.12B	2.33B	2.57B	2.50B	3.30B
Investing Cash Flow	-234.00M	-1.65B	-331.00M	-106.00M	-2.16B	-1.24B
Financing Cash Flow	-2.39B	-915.00M	-1.61B	-1.94B	-1.20B	-2.01B

Cognizant Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 72.83
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CTSH, the sentiment is Positive. The current price of 72.83 is above the 20-day moving average (MA) of 69.52, above the 50-day MA of 69.14, and below the 200-day MA of 75.19, indicating a neutral trend. The MACD of 1.43 indicates Negative momentum. The RSI at 63.54 is Neutral, neither overbought nor oversold. The STOCH value of 74.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CTSH.

Cognizant Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CTSH	80 Outperform	$36.03B	17.31	14.50%	1.72%	7.44%	-4.57%
ACN	80 Outperform	$153.68B	20.39	25.82%	2.52%	7.36%	6.18%
EPAM	74 Outperform	$8.83B	22.94	11.36%	―	9.73%	-0.29%
INFY	74 Outperform	$68.80B	20.81	29.15%	3.21%	4.62%	1.06%
WIT	73 Outperform	$28.13B	17.52	16.39%	3.17%	-1.97%	48.61%
IT	69 Neutral	$17.09B	19.85	109.26%	―	5.24%	-16.05%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Cognizant Corporate Events

Cognizant’s Strong Q3 2025 Performance and AI Focus

Cognizant Technology Solutions is a leading professional services company that specializes in technology and consulting services, primarily operating in the IT sector with a focus on digital transformation and AI integration. In its third-quarter 2025 earnings report, Cognizant reported a revenue of $5.42 billion, marking a 7.4% increase year-over-year and surpassing its guidance range. The company’s operating margin improved to 16.0%, and adjusted EPS rose by 11% to $1.39, despite a GAAP EPS decline due to a one-time tax expense.

Cognizant Reports Strong Q3 2025 Financial Results

Cognizant reported strong financial results for the third quarter of 2025, with revenue reaching $5.42 billion, marking a 7.4% increase year-over-year. The company achieved significant growth in North America and across all segments, driven by organic growth and strategic acquisitions. Despite a decline in GAAP EPS due to a one-time tax expense, the adjusted EPS rose by 11% year-over-year. Cognizant’s strategic focus on AI-led platforms and large deal momentum contributed to its robust performance, with six large deals signed in the quarter. The company also increased its full-year revenue growth guidance and continued its capital return to shareholders through share repurchases and dividends.

The most recent analyst rating on (CTSH) stock is a Hold with a $75.00 price target. To see the full list of analyst forecasts on Cognizant stock, see the CTSH Stock Forecast page.

Cognizant’s Earnings Call: Strong Growth and AI Focus

Cognizant Technology Solutions recently held its earnings call, presenting a positive outlook characterized by strong revenue and bookings growth, improved operating margins, and significant advancements in AI-driven innovation and productivity. Despite facing challenges in the demand environment and potential headwinds in health sciences, the company remains committed to its strategic focus and operational discipline.

Cognizant’s Strong Q2 2025 Results Highlight AI Focus

Cognizant Technology Solutions is a leading professional services company specializing in technology and consulting services, with a focus on digital transformation and AI-driven solutions across various sectors. The company recently reported its second quarter 2025 financial results, showcasing a strong performance with revenue reaching $5.25 billion, an 8.1% increase year-over-year, surpassing its guidance range. Operating margins improved, and earnings per share saw significant growth, reflecting the company’s strategic focus on AI and talent investments. Key highlights include record bookings, driven by two mega deals, and a commitment to return $2.0 billion to shareholders in 2025. Cognizant’s strategic initiatives, including partnerships and platform enhancements, position it well for continued growth in the AI era. Looking ahead, the company maintains a positive outlook with revenue growth guidance of 4.0% to 6.0% for 2025, supported by its robust strategy and execution capabilities.

Cognizant Reports Strong Q2 2025 Financial Results

Cognizant reported its second quarter 2025 financial results, highlighting an 8.1% year-over-year revenue increase to $5.25 billion, surpassing its guidance range. The company achieved a record $27.8 billion in bookings over the past 12 months, driven by two significant deals exceeding $1 billion each. Cognizant plans to return $2.0 billion to shareholders in 2025, reflecting confidence in its long-term strategy. The company continues to focus on AI and technology solutions, securing new contracts and partnerships to enhance its market position.

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.