Cognizant Technology Solutions Corp

CTSH

Services-Computer Programming Services

Mkt Cap

$33.19B

PE

15.86

Debt

$631M

Cash

$2.231B

EV

$31.59B

FCF

$1.398B

Market Cap

$33.19B

P/E Ratio

15.86

Debt

$631M

Cash

$2.231B

EV

$31.59B

FCF

$1.398B

Charts data: {"Earnings":[{"time":"2014-12-30","value":1439267000},{"time":"2015-12-30","value":1623600000},{"time":"2016-12-30","value":1553000000},{"time":"2017-12-30","value":1504000000},{"time":"2018-12-30","value":2101000000},{"time":"2019-12-30","value":1842000000},{"time":"2020-12-30","value":1392000000},{"time":"2021-12-30","value":2137000000},{"time":"2022-12-30","value":2290000000},{"time":"2023-12-30","value":2126000000}],"Sales":[{"time":"2014-12-30","value":10262681000},{"time":"2015-12-30","value":12416000000},{"time":"2016-12-30","value":13487000000},{"time":"2017-12-30","value":14810000000},{"time":"2018-12-30","value":16125000000},{"time":"2019-12-30","value":16783000000},{"time":"2020-12-30","value":16652000000},{"time":"2021-12-30","value":18507000000},{"time":"2022-12-30","value":19428000000},{"time":"2023-12-30","value":19353000000}],"Net Margins":[{"time":"2014-12-30","value":0.14024278840977322},{"time":"2015-12-30","value":0.1307667525773196},{"time":"2016-12-30","value":0.1151479202194706},{"time":"2017-12-30","value":0.10155300472653613},{"time":"2018-12-30","value":0.13029457364341085},{"time":"2019-12-30","value":0.1097539176547697},{"time":"2020-12-30","value":0.08359356233485467},{"time":"2021-12-30","value":0.1154698222294267},{"time":"2022-12-30","value":0.11787111385628989},{"time":"2023-12-30","value":0.10985376944143027}],"Assets":[{"time":"2014-12-30","value":11718916000},{"time":"2015-12-30","value":13065400000},{"time":"2016-12-30","value":14262000000},{"time":"2017-12-30","value":15221000000},{"time":"2018-12-30","value":15913000000},{"time":"2019-12-30","value":16204000000},{"time":"2020-12-30","value":16923000000},{"time":"2021-12-30","value":17852000000},{"time":"2022-12-30","value":17852000000},{"time":"2023-12-30","value":18483000000}],"Stockholders Equity":[{"time":"2014-12-30","value":7740218000},{"time":"2015-12-30","value":9278100000},{"time":"2016-12-30","value":10728000000},{"time":"2017-12-30","value":10669000000},{"time":"2018-12-30","value":11424000000},{"time":"2019-12-30","value":11022000000},{"time":"2020-12-30","value":10836000000},{"time":"2021-12-30","value":11991000000},{"time":"2022-12-30","value":12309000000},{"time":"2023-12-30","value":13227000000}],"ROE":[{"time":"2014-12-30","value":0.18594657153067265},{"time":"2015-12-30","value":0.1749927248035697},{"time":"2016-12-30","value":0.1447613721103654},{"time":"2017-12-30","value":0.14096916299559473},{"time":"2018-12-30","value":0.18391106442577032},{"time":"2019-12-30","value":0.16712030484485574},{"time":"2020-12-30","value":0.12846068660022147},{"time":"2021-12-30","value":0.17821699608039362},{"time":"2022-12-30","value":0.18604273295962304},{"time":"2023-12-30","value":0.16073183639525213}],"ROA":[{"time":"2014-12-30","value":0.16439225266227694},{"time":"2015-12-30","value":0.16695240865185912},{"time":"2016-12-30","value":0.16659655027345394},{"time":"2017-12-30","value":0.175941133959661},{"time":"2018-12-30","value":0.17746496575127255},{"time":"2019-12-30","value":0.15854110096272525},{"time":"2020-12-30","value":0.12527329669680318},{"time":"2021-12-30","value":0.15886175218462917},{"time":"2022-12-30","value":0.1700089625812234},{"time":"2023-12-30","value":0.15300546448087432}]}

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; Health Sciences; Products and Resources; and Communications, Media and Technology. The company offers customer experience enhancement, robotic process automation, analytics, and AI services in areas, such as digital lending, fraud detection, and next generation payments; the shift towards consumerism, outcome-based contracting, digital health, delivering integrated seamless, omni-channel, and patient-centered experience; and services that drive operational improvements in areas, such as clinical development, pharmacovigilance, and manufacturing, as well as claims processing, enrollment, membership, and billing to healthcare providers and payers, and life sciences companies, including pharmaceutical, biotech, and medical device companies. It also provides solution to manufacturers, automakers, retailers and travel and hospitality companies, as well as companies providing logistics, energy and utility services; and digital content, the creation of personalized user experience, and acceleration of digital engineering services to communications, media and entertainment, education, and information services and technology companies. The company was founded in 1994 and is headquartered in Teaneck, New Jersey.

Sector

10-Q
9/30/23
10-Q
6/30/23
10-Q
3/31/23
10-K
12/31/22
10-Q
9/30/22
10-Q
6/30/22
10-Q
3/31/22
10-K
12/31/21
10-Q
9/30/21
10-Q
6/30/21
10-Q
3/31/21
10-K
12/31/20
10-Q
9/30/20
10-Q
6/30/20
10-Q
3/31/20
10-K
12/31/19
10-Q
9/30/19
10-Q
6/30/19
10-Q
3/31/19
10-K
12/31/18

DCF

Discounted Cash Flow Valuation of Cognizant Technology Solutions Corp

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$1.398B	$1.459B	$1.523B	$1.589B	$1.659B	$1.731B	$1.806B	$1.885B	$1.968B	$2.053B	$2.143B	$21.43B
DCF		$1.269B	$1.151B	$1.045B	$948.3M	$860.6M	$781M	$708.8M	$643.2M	$583.7M	$529.7M	$5.297B
Value	$13.82B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 4.2%

Earnings Stability 42%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is high enough to offer a good protection on the profits in case of higher costs or higher interests. Furthermore higher margins reduce earnings’ volatility.

Over time the ROA has been decreasing indicating a lower marginal ROA with respect to the calculated one, this could impede growth.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Net Margin	13%	12%	10%	13%	11%	8.4%	12%	12%	11%	11%
ROA	17%	17%	18%	18%	16%	13%	16%	17%	15%	15%
ROE	17%	14%	14%	18%	17%	13%	18%	19%	16%	16%

What is the average Net Margin?

The average Net Margin over the past 5 years is +11.11%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is -0.13%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +15.72%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is -0.16%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +16.74%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is -0.03%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Under the assumption that FCF does not diminish and debt does not increase, the current years to repay the debt are acceptable.

The Graham’s stability indicate a relevant drawdown, consider checking when it has occured and why.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Debt FCF	0.71	0.73	0.46	0.34	0.35	0.24	0.30	0.29	0.32	0.45
Debt Equity	0.14	0.09	0.09	0.07	0.07	0.06	0.06	0.05	0.05	0.05
MIN
Graham Stability	-	-	98%	100%	100%	77%	100%	100%	100%	77%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 0.45.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is -0.01.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.77.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has been increasing in past years.

Years	12-2016	12-2018	12-2020	12-2022	Trend
Revenue	5.3%	3.7%	5.1%	-0.39%	-1.7%
Net Income	4.6%	0.24%	15%	-7.2%	0.065%
Stockholders Equity	3%	3%	6.9%	7.5%	-1.2%
FCF	6.2%	-1.9%	-11%	-10%	-4.7%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +3.72%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is -1.72%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +0.24%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is +0.06%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +2.97%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is -1.25%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is -1.89%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is -4.66%.