Cognizant (CTSH)
Information Technology · $29.1B market cap · SEC CIK 0001058290
ahead of 59% of the S&P 500 · #33 of 73 in Information Technology
Next reports on Feb 2, 2027, after the close, with analysts expecting $1.54 in earnings per share.
52-week range $37.08 to $87.03. 25% below its 52-week high and 75% above its low.
The case for CTSH
- Cheap for its growth: 11.3× earnings, where 7% a year of growth plus a 1.6% dividend would justify about 21×.
- Holds more cash ($1.9B) than long-term debt ($543M).
- Free cash flow of 8.9% of its market value a year: a lot of cash for the price.
- Earnings per share up 27.3%.
- Return on equity of 17%.
- Current assets cover the near-term bills 2.2 times over.
The case against
- Revenue growth of +5.0% is slower than 92% of Information Technology companies.
- Trailed the S&P 500 by 25 points over the past year.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Information Technology companies (momentum is judged against fixed thresholds only), and the five are blended by weight. The score is where that blend places it in the S&P 500. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings and cash, against the growth you get | 83 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 38 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 48 |
| Momentumhow the price has behaved lately | 52 |
| Stabilityhow violently it moves, what it owes and what it pays you | 79 |
- Each factor except momentum is half fixed thresholds, half rank among the 73 Information Technology companies.
The financials
Revenue growth
Is the business growing? Slowly
| Last 12 months | +5.0% |
|---|---|
| Over 5 years | +4.9% a year |
| FY2025 revenue | $21.1B (+7%) |
Free cash flow
Is it generating real cash? Yes
| FY2025 free cash flow | $2.6B |
|---|---|
| Of revenue | 12% |
| Of profit | 116% |
Profit margins
Is profitability improving? Holding steady
| Gross margin | 33% |
|---|---|
| Operating margin | 16% |
| Net margin, FY24 → FY25 → now | 11.3% → 10.6% → 11.8% |
Debt vs. cash
Is the balance sheet healthy? Yes, more cash than debt
| Cash | $1.9B |
|---|---|
| Long-term debt | $543M |
| Net cash | $1.4B |
| Years to repay | 0.2 yrs |
Valuation
Is the stock price reasonable? Yes, it looks cheap
| P/E | 11.3× |
|---|---|
| Fair P/E for its growth | 21× |
| P/FCF | 11.2× |
| Forward P/E | 10.5× |
| EV / EBITDA | 7.3× |
At 11.3× earnings it trades well below the 21× that 7% a year of growth plus a 1.6% dividend would justify. At 11.2× free cash flow it trades well below that same mark.
The financials, five years deep
Pulled from Cognizant's XBRL filings on SEC EDGAR. Italic rows are worked out from the others.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Revenue growth | |||||
| Revenue | $21.1B | $19.7B | $19.4B | $19.4B | $18.5B |
| Change on the year | +7% | +2% | 0% | +5% | — |
| Free cash flow | |||||
| Free cash flow | $2.6B | $1.8B | $2.0B | $2.2B | $2.2B |
| Of revenue | 12% | 9% | 10% | 12% | 12% |
| Profit margins | |||||
| Operating margin | 16.1% | 14.7% | 13.9% | 15.3% | 15.3% |
| Net margin | 10.6% | 11.3% | 11.0% | 11.8% | 11.5% |
| Debt vs. cash | |||||
| Cash | $1.9B | $2.2B | $2.6B | $2.2B | $1.8B |
| Long-term debt | $543M | $875M | $606M | $638M | $626M |
| Net cash (debt) | $1.4B | $1.4B | $2.0B | $1.6B | $1.2B |
What Cognizant says it does
Overview Cognizant is one of the world’s leading professional services companies, engineering modern businesses and delivering strategic outcomes for our clients. We help clients modernize technology, reimagine processes and transform experiences so they can stay ahead in today's fast-changing world, where AI is reshaping organizations in every field. As an AI builder, we provide deep expertise at the intersection of industry and technology, combining our perspective with extensive knowledge of our clients' organizations to build industry-specific platforms and incorporate context into systems, AI models and custom solutions. We tailor our services and solutions to specific industries with an integrated global delivery model that employs client service and delivery teams based at client locations and dedicated global and regional delivery centers. Our services include consulting, application development, systems integration, quality…
Risk factors CTSH lists in its 10-K
- Our results of operations could be adversely affected by macroeconomic and geopolitical conditions globally and in particular in the markets in which our clients and operations are concentrated
- We face intense and evolving competition and our service offerings must keep pace with significant technological advances in the rapidly changing markets we compete in
- Our use of AI technologies may not be successful and may present business, financial, legal and reputational risks
- Many of our contracts with clients are short-term, and our business, results of operations and financial condition could be adversely affected if our clients terminate their contracts on short notice
- Our failure to meet specified service levels or milestones required by certain of our client contracts may result in our client contracts being less profitable, potential liability for penalties or damages or reputational harm
- We may not be able to achieve our profitability goals and maintain our capital return strategy
- We face challenges related to growing our business organically as well as inorganically through acquisitions, and we may not be able to achieve our targeted growth rates or successfully acquire, invest in or integrate businesses
- We face legal, reputational and financial risks if we fail to protect client and/or Cognizant data from cybersecurity incidents
- Fluctuations in foreign currency exchange rates, or the failure of our hedging strategies to mitigate such fluctuations, can adversely impact our profitability, results of operations and financial condition
- Pandemics, epidemics or other outbreaks of disease have had and may in the future have a material adverse impact upon our business, liquidity, results of operations and financial condition
- Extreme weather and risks arising from the transition to a lower-carbon economy may impact our business
- Evolving and conflicting sustainability and societal related expectations or standards could adversely affect our business or damage our reputation
- Our business subjects us to considerable potential exposure to litigation and legal claims and we could be materially adversely affected if we incur legal liability
- If we infringe upon the IP rights of others or our IP rights are infringed upon, our business may be adversely affected