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Cognizant
(NASDAQ:CTSH)
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Rating:76Outperform
Price Target:
$57.00
▲(25.41% Upside)
Action:Reiterated
Date:07/29/26
The score is driven primarily by strong financial quality (conservative leverage, durable profitability, and robust free cash flow) and supportive valuation (low P/E with a solid dividend). Earnings-call updates reinforce improving growth and steady margin expansion guidance, while the main offset is weaker longer-term technical posture (still below the 100- and 200-day averages) and noted near-term cost/working-capital headwinds.
Positive Factors
Strong balance sheet and low leverage
Cognizant’s very low TTM debt-to-equity (~0.07) and sizable equity base give durable financial flexibility to fund acquisitions, buybacks, and investments through cycles. This conservatism supports strategic optionality and resilience versus peers during downturns or investment waves.
Negative Factors
Margin compression vs prior years
While margins are recovering, the company has experienced structural margin compression since 2021–2022, implying persistent pricing pressure, cost inflation or mix shifts toward lower-margin work. This could constrain long-term operating leverage unless higher-value mix gains accelerate materially.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong balance sheet and low leverage
Cognizant’s very low TTM debt-to-equity (~0.07) and sizable equity base give durable financial flexibility to fund acquisitions, buybacks, and investments through cycles. This conservatism supports strategic optionality and resilience versus peers during downturns or investment waves.
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
$24.93B
Dividend Yield2.31%
Average Volume (3M)12.32M
Price to Earnings (P/E)11.9
Beta (1Y)0.92
Revenue Growth5.64%
EPS Growth-5.39%
CountryUS
Employees351,600
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)4.66
Shares Outstanding450,444,200
10 Day Avg. Volume7,736,101
30 Day Avg. Volume12,317,078
Financial Highlights & Ratios
PEG Ratio20.57
Price to Book (P/B)2.66
Price to Sales (P/S)1.89
P/FCF Ratio15.38
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$61.18Price Target Upside34.60% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering20
EPS Forecast (FY)5.75
Revenue Forecast (FY)$22.20B
Cognizant Business Overview & Revenue Model
Company Description
Cognizant Technology Solutions Corporation functions as a global professional services firm, delivering a comprehensive suite of consulting, technology, and outsourcing solutions across North America, Europe, and other international markets. Its o...
How the Company Makes Money
Cognizant primarily makes money by providing services to enterprise customers under commercial contracts and collecting fees for the delivery of people-based professional services and managed services. Its revenue model is largely services-driven:...
Cognizant Earnings Call Summary
Earnings Call Date:Jul 29, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 04, 2026
Earnings Call Sentiment Positive
The call conveyed a predominantly positive operational and strategic picture: revenue growth, margin expansion, strong bookings and large‑deal momentum (particularly in financial services), accelerated AI adoption and platform initiatives, meaningful share repurchases, and healthy free cash flow. Notable near‑term headwinds include Project LEAP costs, India labor reforms run‑rate impacts, higher interest expense from revolver use for acquisitions and buybacks, higher DSO, some industry pockets of muted demand, and observable AI execution/ROI challenges across a portion of the Global 2000. On balance, the positive growth, margin recovery, and AI‑led strategy and execution appear to outweigh the lowlights.Positive Updates
Revenue Growth
Total revenue grew 4.1% year-over-year in constant currency to $5.5 billion, with sequential organic growth at the high end of expectations driven largely by organic business.
Negative Updates
Cautious Demand and Discretionary Spend Pressure
Management noted persistently cautious demand and elevated macro uncertainty; discretionary spending remains pressured across several industries, leading to a revised full‑year revenue guidance range of 4.0% to 5.5% in constant currency (includes ~150 bps inorganic).
Read all updates
Q2-2026 Updates
Positive
Negative
Revenue Growth
Total revenue grew 4.1% year-over-year in constant currency to $5.5 billion, with sequential organic growth at the high end of expectations driven largely by organic business.
Read all positive updates
Company Guidance
Management guided Q3 revenue growth of 3.8%–5.3% year‑over‑year in constant currency (including ~200 bps from recent acquisitions) and revised full‑year revenue to 4.0%–5.5% CC (including ~150 bps of inorganic growth), while keeping adjusted operating margin guidance unchanged at 16.0%–16.2% (about a 20 bps Y/Y expansion). They expect free cash‑flow conversion of 90%–100% of net income, a full‑year tax rate toward the low end of 25%–26% (with Q3 above the full‑year high end), and a weighted‑average diluted share count of ~460 million; EPS guidance was raised to $5.70–$5.82 (up ~8%–10% Y/Y). Management reiterated no change to Project LEAP cost/savings assumptions (program to run through year), noted modestly higher interest expense from a ~$1.0B revolver draw, and said the guidance assumes stable discretionary spend at the midpoint with the high end reflecting improved short‑cycle revenue in Q4 and an active M&A pipeline.Cognizant Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
86
Very Positive
Cash Flow
80
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 21.64B | 21.11B | 19.74B | 19.35B | 19.43B | 18.51B |
| Gross Profit | 6.93B | 7.12B | 6.78B | 6.69B | 6.98B | 6.90B |
| EBITDA | 3.96B | 4.17B | 3.53B | 3.38B | 3.60B | 3.41B |
| Net Income | 2.22B | 2.23B | 2.24B | 2.13B | 2.29B | 2.14B |
Balance Sheet | ||||||
| Total Assets | 20.82B | 20.69B | 19.97B | 18.48B | 17.85B | 17.85B |
| Cash, Cash Equivalents and Short-Term Investments | 1.05B | 1.91B | 2.24B | 2.63B | 2.50B | 2.72B |
| Total Debt | 2.09B | 1.57B | 1.50B | 1.31B | 1.53B | 1.64B |
| Total Liabilities | 6.36B | 5.68B | 5.56B | 5.26B | 5.54B | 5.86B |
| Stockholders Equity | 14.46B | 15.02B | 14.41B | 13.23B | 12.31B | 11.99B |
Cash Flow | ||||||
| Free Cash Flow | 2.60B | 2.60B | 1.83B | 2.01B | 2.24B | 2.22B |
| Operating Cash Flow | 2.92B | 2.88B | 2.12B | 2.33B | 2.57B | 2.50B |
| Investing Cash Flow | -1.65B | -230.00M | -1.65B | -331.00M | -106.00M | -2.16B |
| Financing Cash Flow | -2.02B | -2.27B | -915.00M | -1.61B | -1.94B | -1.20B |
Cognizant Technical Analysis
Positive
45.45
Price Trends
47.65
Positive
52.15
Positive
63.43
Negative
Market Momentum
2.29
Negative
69.26
Neutral
84.07
Negative
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 45.45 is below the 20-day moving average (MA) of 46.48, below the 50-day MA of 47.65, and below the 200-day MA of 63.43, indicating a neutral trend. The MACD of 2.29 indicates Negative momentum. The RSI at 69.26 is Neutral, neither overbought nor oversold. The STOCH value of 84.07 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
77 Outperform | $23.14B | 8.64 | 18.45% | 4.05% | 12.27% | 222.91% | |
76 Outperform | $24.93B | 11.88 | 14.94% | 2.82% | 5.64% | -5.39% | |
76 Outperform | $101.53B | 13.15 | 25.00% | 4.44% | 6.74% | -0.66% | |
75 Outperform | $48.17B | 14.45 | 33.03% | 4.71% | -0.64% | 5.69% | |
65 Neutral | $19.08B | 14.54 | 15.58% | 1.11% | -0.12% | -7.87% | |
62 Neutral | $28.76B | 9.13 | 12.51% | ― | 1.87% | 3.79% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
CTSH
Cognizant
56.13
-12.32
-18.00%
ACN
Accenture
170.43
-68.69
-28.73%
FIS
Fidelity National Info
44.26
-25.70
-36.73%
FISV
Fiserv
55.78
-78.50
-58.46%
INFY
Infosys
12.60
-3.11
-19.78%
WIT
Wipro
2.05
-0.54
-20.94%
Cognizant Corporate Events
Business Operations and StrategyStock BuybackDividendsFinancial DisclosuresM&A TransactionsPrivate Placements and Financing
Cognizant Posts Solid Q2 Results, Raises 2026 Outlook
Positive
Jul 29, 2026
Cognizant reported its second-quarter 2026 results on July 29, 2026, posting revenue of $5.5 billion, up 4.5% year over year, with constant-currency growth of 4.1% and 12% revenue growth in Financial Services. GAAP operating margin rose to 15.9%, ...
Legal ProceedingsRegulatory Filings and Compliance
Cognizant Announces Preliminary Approval of Derivative Settlement
Positive
Jul 10, 2026
On June 30, 2026, the U.S. District Court for the District of New Jersey preliminarily approved a proposed settlement of a stockholder derivative action brought on behalf of Cognizant Technology Solutions Corporation, which alleged breaches of fid...
Executive/Board ChangesShareholder Meetings
Cognizant Shareholders Reelect Board and Back Governance Framework
Positive
Jun 3, 2026
Cognizant held its annual meeting of shareholders on June 2, 2026, with approximately 92.9% of its 473.9 million Class A shares represented, reflecting strong investor participation and engagement in governance matters. All 13 director nominees we...
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, ...
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.