Cognizant Technology Solutions (CTSH)
NASDAQ:CTSH
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Cognizant
(NASDAQ:CTSH)
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Rating:68Neutral
Price Target:
$63.00
▲(8.77% Upside)
Action:DowngradedDate:02/27/26
CTSH scores as a moderately attractive setup driven by strong financial stability (low leverage, solid profitability) and supportive valuation (low P/E with a dividend). Offsetting these positives, technicals are notably bearish with the stock well below major moving averages and negative momentum, while the latest guidance suggests steady—but not accelerating—growth with limited margin expansion.
Positive Factors
Low leverage / strong balance sheet
Cognizant’s TTM debt-to-equity (~0.08) and net cash position (net cash ~ $1.3B excluding escrow) provide durable financial flexibility to fund M&A, buybacks, dividends and strategic investments. Low leverage reduces refinancing risk and supports capital allocation through cycles, bolstering long-term stability.
Negative Factors
Modest organic revenue growth
Top-line momentum remains constrained and uneven, limiting the company’s ability to drive scale-driven margin expansion. Modest organic growth increases reliance on inorganic deals and large contracts to lift revenue, which can slow operating leverage and limit long-term EPS and cash-flow upside if organic demand remains tepid.
Read all positive and negative factors
Positive Factors
Negative Factors
Low leverage / strong balance sheet
Cognizant’s TTM debt-to-equity (~0.08) and net cash position (net cash ~ $1.3B excluding escrow) provide durable financial flexibility to fund M&A, buybacks, dividends and strategic investments. Low leverage reduces refinancing risk and supports capital allocation through cycles, bolstering long-term stability.
Read all positive factors
Cognizant (CTSH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$27.70B
Dividend Yield1.46%
Average Volume (3M)5.67M
Price to Earnings (P/E)17.9
Beta (1Y)0.82
Revenue Growth7.44%
EPS Growth-4.57%
CountryUS
Employees336,300
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)1.35
Shares Outstanding478,246,920
10 Day Avg. Volume4,215,700
30 Day Avg. Volume5,670,603
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 Cap1.00
Enterprise Value/Revenue1.31
Enterprise Value/Gross Profit3.96
Enterprise Value/Ebitda6.80
Forecast
1Y Price Target
$89.07Price Target Upside53.78% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
EPS Forecast (FY)5.65
Revenue Forecast (FY)$22.39B
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 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 Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call highlighted a year of profitable growth with strong large‑deal momentum, above‑guide revenue and margin performance, robust free cash flow, accelerated AI adoption, and strategic M&A that expanded capabilities (notably in Azure and defense). Management acknowledged near‑term headwinds including margin dilution from compensation and portfolio mix, modest ACV softness in smaller deals, a complex macro/discretionary environment, and one‑time India labor code impacts. Guidance for 2026 is constructive but conservative (moderate revenue growth range and limited margin expansion). Overall, the positive execution on large deals, AI adoption, productivity gains, and cash returns outweigh the challenges described, supporting a constructive outlook.Positive Updates
Revenue Growth — Q4 and Full Year
Q4 revenue of $5.3B grew 3.8% year‑over‑year in constant currency (all organic). Full‑year 2025 revenue was $21.1B, up 6.4% in constant currency, surpassing $20B and the high end of guidance.
Negative Updates
Gross Margin Pressure from Compensation and Portfolio Mix
Q4 gross margin was pressured by higher variable compensation (merit cycle and elevated bonus funding) and salary increases effective November. Addition of Belcan (more on‑site centric) also diluted aggregate gross margin characteristics.
Read all updates
Q4-2025 Updates
Positive
Negative
Revenue Growth — Q4 and Full Year
Q4 revenue of $5.3B grew 3.8% year‑over‑year in constant currency (all organic). Full‑year 2025 revenue was $21.1B, up 6.4% in constant currency, surpassing $20B and the high end of guidance.
Read all positive updates
Company Guidance
Cognizant guided Q1 2026 revenue growth of 2.7%–4.2% year‑over‑year in constant currency (including ~100 bps from the Three Cloud acquisition and noting a modest sequential organic decline due in part to lower bill days), and full‑year 2026 revenue growth of 4.0%–6.5% CC (including ~150 bps of inorganic contribution, roughly one‑third of which is expected from future M&A), with the midpoint implying ~3.8% organic growth. The company expects adjusted operating margin of 15.9%–16.1% (10–30 bps expansion), adjusted diluted EPS of $5.56–$5.70 (≈5%–8% YoY growth) based on an expected weighted average diluted share count of ~475 million, an adjusted effective tax rate of 25%–26%, and free cash flow conversion of 90%–100% of net income. Management plans to return approximately $1.6 billion of capital to shareholders in 2026 (about $1.0 billion for repurchases and the remainder as regular dividends) while remaining active on M&A to support inorganic growth.Cognizant Financial Statement Overview
Summary
Income Statement
76
Positive
Balance Sheet
88
Very Positive
Cash Flow
73
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 21.11B | 19.74B | 19.35B | 19.43B | 18.51B |
| Gross Profit | 7.12B | 6.78B | 6.69B | 6.98B | 6.90B |
| EBITDA | 4.17B | 3.53B | 3.38B | 3.60B | 3.41B |
| Net Income | 2.23B | 2.24B | 2.13B | 2.29B | 2.14B |
Balance Sheet | |||||
| Total Assets | 20.69B | 19.97B | 18.48B | 17.85B | 17.85B |
| Cash, Cash Equivalents and Short-Term Investments | 1.91B | 2.24B | 2.63B | 2.50B | 2.72B |
| Total Debt | 1.57B | 1.50B | 1.31B | 1.53B | 1.64B |
| Total Liabilities | 5.68B | 5.56B | 5.26B | 5.54B | 5.86B |
| Stockholders Equity | 15.02B | 14.41B | 13.23B | 12.31B | 11.99B |
Cash Flow | |||||
| Free Cash Flow | 2.60B | 1.83B | 2.01B | 2.24B | 2.22B |
| Operating Cash Flow | 2.88B | 2.12B | 2.33B | 2.57B | 2.50B |
| Investing Cash Flow | -230.00M | -1.65B | -331.00M | -106.00M | -2.16B |
| Financing Cash Flow | -2.27B | -915.00M | -1.61B | -1.94B | -1.20B |
Cognizant Technical Analysis
Negative
57.92
Price Trends
65.37
Negative
73.29
Negative
72.06
Negative
Market Momentum
-1.50
Negative
32.72
Neutral
27.85
Neutral
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 57.92 is below the 20-day moving average (MA) of 60.86, below the 50-day MA of 65.37, and below the 200-day MA of 72.06, indicating a bearish trend. The MACD of -1.50 indicates Negative momentum. The RSI at 32.72 is Neutral, neither overbought nor oversold. The STOCH value of 27.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CTSH.
Cognizant Risk Analysis
Cognizant disclosed 14 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 0 New Risks
Cognizant Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $114.21B | 17.31 | 24.82% | 2.25% | 6.58% | 1.19% | |
73 Outperform | $58.00B | 24.55 | 29.68% | 2.58% | 4.62% | 1.06% | |
68 Neutral | $27.70B | 17.90 | 14.84% | 1.46% | 7.44% | -4.57% | |
68 Neutral | $30.00B | 10.60 | 13.64% | ― | 5.16% | 24.92% | |
67 Neutral | $23.05B | 21.25 | 15.49% | 2.78% | -1.97% | 48.61% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $22.31B | 89.95 | 2.68% | 2.40% | 4.26% | -75.98% |
* Technology Sector Average
CTSH
Cognizant
57.92
-11.65
-16.74%
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Cognizant Corporate Events
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...
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Cognizant outlines 2026 growth outlook and capital returns
Positive
Feb 4, 2026
On February 4, 2026, Cognizant reported that fourth-quarter 2025 revenue climbed 4.9% to $5.3 billion while full-year sales rose 7% to $21.1 billion, aided by Belcan’s contribution and momentum in AI-led large deals, with operating margins, ...
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.