Cognizant (CTSH) AI Stock Analysis

• Market Cap: $41.22B
• Dividend Yield: 1.45%
• Average Volume (3M): 4.47M
• Price to Earnings (P/E): 19.8
• Beta (1Y): 0.82
• 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: 5,068,331
• 30 Day Avg. Volume: 4,470,492
• 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: 0.76
• Enterprise Value/Revenue: 1.51
• Enterprise Value/Gross Profit: 4.43
• Enterprise Value/Ebitda: 7.99
• 1Y Price Target: $87.20
• Price Target Upside: 2.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13
• EPS Forecast (FY): 5.19
• Revenue Forecast (FY): $21.09B

• Rating: 79 Outperform
• Price Target: $92.00 ▲(7.72% Upside)

Cognizant's strong financial performance and strategic focus on AI-driven growth are the most significant factors driving the stock's attractiveness. While technical indicators suggest potential short-term volatility, the company's robust earnings call and fair valuation support a positive outlook.

Positive Factors

Revenue Growth

Consistent revenue growth over five consecutive quarters indicates strong market demand and effective execution of business strategy.

AI and Productivity Gains

AI-driven productivity improvements enhance operational efficiency and competitive positioning, supporting long-term growth.

Large Deal Signings

Securing large deals boosts revenue visibility and strengthens client relationships, contributing to sustained business growth.

Negative Factors

Bookings Decline

A decline in bookings may signal potential future revenue challenges, affecting the company's ability to maintain growth momentum.

Geopolitical Uncertainty

Geopolitical uncertainties can impact client spending and project timelines, posing risks to revenue stability and growth.

Impact of U.S. Policy Changes

Policy changes leading to significant tax expenses can affect net income and financial flexibility, impacting long-term profitability.

Cognizant Business Overview & Revenue Model

Company Description

Cognizant Technology Solutions Corporation (CTSH) is a leading provider of IT services, consulting, and business process outsourcing solutions. Founded in 1994, the company operates primarily in North America, Europe, and Asia, serving a diverse range of industries including financial services, healthcare, manufacturing, retail, and technology. Cognizant offers a wide array of services including digital transformation, application development, cloud services, and data analytics, aimed at helping organizations improve their operational efficiency and accelerate growth.

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

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: 85.41
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• 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 85.41 is above the 20-day moving average (MA) of 80.53, above the 50-day MA of 74.25, and above the 200-day MA of 74.05, indicating a bullish trend. The MACD of 3.04 indicates Negative momentum. The RSI at 82.26 is Negative, neither overbought nor oversold. The STOCH value of 78.81 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	79 Outperform	$41.22B	19.80	14.50%	1.45%	7.44%	-4.57%
ACN	79 Outperform	$167.53B	22.51	25.35%	2.25%	6.58%	1.19%
INFY	76 Outperform	$74.22B	25.62	29.15%	2.37%	4.62%	1.06%
WIT	74 Outperform	$30.92B	20.39	16.39%	2.70%	-1.97%	48.61%
FISV	68 Neutral	$36.54B	10.51	13.64%	―	5.16%	24.92%
FIS	64 Neutral	$34.20B	208.03	1.15%	2.42%	4.26%	-75.98%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Cognizant Corporate Events

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.