Cognizant Technology Solutions (CTSH)
NASDAQ:CTSH
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Cognizant
(NASDAQ:CTSH)
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Rating:73Outperform
Price Target:
$57.00
▼(-7.01% Downside)
Action:Reiterated
Date:05/22/26
CTSH scores well on fundamentals and valuation: a strong, low-leverage balance sheet and healthy profitability support the rating, and the low P/E plus dividend yield improve the risk/reward. Earnings-call signals were net-positive (raised margin guidance and strong bookings) but tempered by near-term cost pressures and discretionary-demand caution. The primary drag remains technicals, with the stock in a clear downtrend below key moving averages.
Positive Factors
Balance Sheet Strength
Cognizant’s very low leverage and steadily growing equity create durable financial flexibility. That conservative capital structure supports sustained investment in AI, acquisitions, and buybacks, and gives the company runway to absorb cyclical shocks while funding multi-year transformation programs.
Negative Factors
Gross Margin Pressure
Material gross-margin decline driven by compensation, lower utilization and investments suggests margin sustainability risks. If utilization and comp pressures persist, improved bookings may not fully translate into durable operating-margin expansion without consistent productivity gains or higher-value mix.
Read all positive and negative factors
Positive Factors
Negative Factors
Balance Sheet Strength
Cognizant’s very low leverage and steadily growing equity create durable financial flexibility. That conservative capital structure supports sustained investment in AI, acquisitions, and buybacks, and gives the company runway to absorb cyclical shocks while funding multi-year transformation programs.
Read all positive factors
Cognizant Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyCognizant (CTSH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$24.79B
Dividend Yield1.46%
Average Volume (3M)7.47M
Price to Earnings (P/E)11.1
Beta (1Y)0.85
Revenue Growth6.55%
EPS Growth-3.10%
CountryUS
Employees336,300
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)4.61
Shares Outstanding473,869,480
10 Day Avg. Volume8,743,789
30 Day Avg. Volume7,468,558
Financial Highlights & Ratios
PEG Ratio20.23
Price to Book (P/B)2.66
Price to Sales (P/S)1.89
P/FCF Ratio15.38
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue1.15
Enterprise Value/Gross Profit3.58
Enterprise Value/Ebitda6.14
Forecast
1Y Price Target
$73.06Price Target Upside19.19% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering18
EPS Forecast (FY)5.7
Revenue Forecast (FY)$22.31B
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; Healthc...
How the Company Makes Money
Cognizant primarily makes money by delivering services to enterprise clients under client contracts that generate revenue from (1) time-and-materials billing (charging for labor hours and related expenses), (2) fixed-price or milestone-based proje...
Cognizant Earnings Call Summary
Earnings Call Date:Apr 29, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 05, 2026
Earnings Call Sentiment Positive
The call presented multiple clear operational and strategic positives — strong bookings (21% YoY), continued revenue growth (3.9% CC), EPS growth (+14%), accelerating AI engagements and platform/IP momentum, and a structured Project LEAP program to drive future cost savings and margin expansion. Offsetting these positives were near-term execution and market pressures: a Q1 gross margin decline (-80 bps) driven by investments and comp costs, caution on discretionary spending, ACV flatness, a modest Q1 free cash flow read, and one-time costs for workforce restructuring. On balance, the company showed strategic momentum and financial discipline while acknowledging transitional costs and macro uncertainty.Positive Updates
Revenue Growth
Q1 revenue of $5.4 billion grew 3.9% year-over-year in constant currency, led by North America and ramp of recently won large deals.
Negative Updates
Gross Margin Pressure in Q1
Q1 gross margin decreased by ~80 basis points year-over-year, driven by investments in the integrated offering strategy, increased compensation costs (including a salary increase) and lower utilization from bench growth.
Read all updates
Q1-2026 Updates
Positive
Negative
Revenue Growth
Q1 revenue of $5.4 billion grew 3.9% year-over-year in constant currency, led by North America and ramp of recently won large deals.
Read all positive updates
Company Guidance
Management guided Q2 revenue growth of 3.2%–4.7% year‑over‑year in constant currency (including ~150 bps contribution from recent acquisitions / a partial Australia quarter) and reaffirmed full‑year revenue of 4.0%–6.5% CC (recent acquisitions expected to contribute ~150 bps), noting the midpoint assumes some improvement in discretionary spending in H2 and that large‑deal ramps plus two full quarters of Astra contribution will be meaningful late‑year drivers; they raised 2026 adjusted operating margin guidance to 16.0%–16.2% (implying ~20–40 bps YoY expansion on top of the 50 bps expansion in 2025) and gave EPS guidance of $5.63–$5.77 (7%–9% growth) on an expected diluted share count of ~473 million, with a tax rate of 25%–26%; Project LEAP is expected to deliver ~$200M–$300M of savings in 2026 (full benefit in 2027) while incurring ~$230M–$320M of one‑time 2026 costs (≈$200M–$270M severance + $30M–$50M other), with ~2/3 of savings to be reinvested and ~1/3 toward upskilling; cash/FCF guidance remains 90%–100% FCF conversion of net income and capital return plans are ~$1.6B in 2026 (≈$1.0B buybacks + remainder dividends); management cited supportive booking momentum (Q1 bookings +21%, TTM bookings +11%, book‑to‑bill 1.4) as underpinning the guidance.Cognizant Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
88
Very Positive
Cash Flow
74
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 21.41B | 21.11B | 19.74B | 19.35B | 19.43B | 18.51B |
| Gross Profit | 6.86B | 7.12B | 6.78B | 6.69B | 6.98B | 6.90B |
| EBITDA | 4.00B | 4.17B | 3.53B | 3.38B | 3.60B | 3.41B |
| Net Income | 2.23B | 2.23B | 2.24B | 2.13B | 2.29B | 2.14B |
Balance Sheet | ||||||
| Total Assets | 20.50B | 20.69B | 19.97B | 18.48B | 17.85B | 17.85B |
| Cash, Cash Equivalents and Short-Term Investments | 1.52B | 1.91B | 2.24B | 2.63B | 2.50B | 2.72B |
| Total Debt | 1.09B | 1.57B | 1.50B | 1.31B | 1.53B | 1.64B |
| Total Liabilities | 5.43B | 5.68B | 5.56B | 5.26B | 5.54B | 5.86B |
| Stockholders Equity | 15.07B | 15.02B | 14.41B | 13.23B | 12.31B | 11.99B |
Cash Flow | ||||||
| Free Cash Flow | 2.47B | 2.60B | 1.83B | 2.01B | 2.24B | 2.22B |
| Operating Cash Flow | 2.76B | 2.88B | 2.12B | 2.33B | 2.57B | 2.50B |
| Investing Cash Flow | -1.03B | -230.00M | -1.65B | -331.00M | -106.00M | -2.16B |
| Financing Cash Flow | -2.21B | -2.27B | -915.00M | -1.61B | -1.94B | -1.20B |
Cognizant Technical Analysis
Neutral
61.30
Price Trends
56.30
Negative
65.16
Negative
68.41
Negative
Market Momentum
-1.72
Negative
50.12
Neutral
85.66
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CTSH, the sentiment is Neutral. The current price of 61.3 is above the 20-day moving average (MA) of 50.89, above the 50-day MA of 56.30, and below the 200-day MA of 68.41, indicating a neutral trend. The MACD of -1.72 indicates Negative momentum. The RSI at 50.12 is Neutral, neither overbought nor oversold. The STOCH value of 85.66 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CTSH.
Cognizant Risk Analysis
Cognizant disclosed 2 risk factors in its most recent earnings report. Cognizant reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Project Leap, including the associated reductions in headcount, could disrupt our business, may not result in anticipated savings, and could result in total costs and expenses that are greater than expected. Q1, 2026
Cognizant Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $109.20B | 17.31 | 24.82% | 2.25% | 7.27% | 0.49% | |
73 Outperform | $24.79B | 11.05 | 14.79% | 1.46% | 6.55% | -3.10% | |
73 Outperform | $22.55B | 2.55 | 18.45% | 2.40% | 12.27% | 222.91% | |
73 Outperform | $50.07B | 14.68 | 31.77% | 2.58% | 4.85% | 6.19% | |
66 Neutral | $21.89B | 14.82 | 15.03% | 2.78% | -0.55% | -3.97% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $29.77B | 13.08 | 12.51% | ― | 1.87% | 3.79% |
* Technology Sector Average
CTSH
Cognizant
52.75
-24.73
-31.92%
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FIS
Fidelity National Info
43.56
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FISV
Fiserv
57.13
-103.01
-64.32%
INFY
Infosys
12.67
-5.00
-28.28%
WIT
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2.01
-0.74
-26.80%
Cognizant Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Cognizant Draws $1 Billion From Revolving Credit Facility
Positive
May 21, 2026
On May 15, 2026, Cognizant Technology Solutions Corporation notified its lenders that it would borrow $1 billion under its revolving credit facility, with funding scheduled for May 20, 2026. The borrowing is being made under an existing credit agr...
Business Operations and StrategyStock BuybackM&A TransactionsPrivate Placements and Financing
Cognizant Expands Buybacks to Support AI-Led Growth
Positive
May 18, 2026
On May 18, 2026, Cognizant said its board approved a $2 billion increase to the company’s existing stock repurchase authorization, leaving about $3.45 billion available for buybacks as of May 17. The company also lifted its 2026 share repurc...
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Cognizant Reports Strong Q1 2026 Growth and Margins
Positive
Apr 29, 2026
On April 29, 2026, Cognizant reported first quarter 2026 revenue of $5.4 billion, up 5.8% year-over-year, with constant-currency growth of 3.9%, GAAP operating margin of 15.6% and adjusted EPS of $1.40, up 13.8%. Bookings grew 21% in the quarter, ...
Business Operations and StrategyExecutive/Board Changes
Cognizant Elevates Ayyar to Lead Asia Pacific Operations
Positive
Feb 26, 2026
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 Grou...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.