Reviewing Cognizant Technology Solutions (CTSH) and The Competition

Cognizant Technology Solutions (NASDAQ:CTSH) is one of 273 public companies in the “IT Services” industry, but how does it compare to its peers? We will compare Cognizant Technology Solutions to related businesses based on the strength of its earnings, risk, dividends, institutional ownership, profitability, analyst recommendations and valuation.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Cognizant Technology Solutions and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cognizant Technology Solutions	0	15	9	0	2.38
Cognizant Technology Solutions Competitors	2009	5684	9514	343	2.47

Cognizant Technology Solutions presently has a consensus target price of $68.00, suggesting a potential upside of 7.66%. As a group, “IT Services” companies have a potential upside of 24.65%. Given Cognizant Technology Solutions’ peers stronger consensus rating and higher probable upside, analysts plainly believe Cognizant Technology Solutions has less favorable growth aspects than its peers.

Volatility and Risk

Cognizant Technology Solutions has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, Cognizant Technology Solutions’ peers have a beta of 2.16, indicating that their average stock price is 116% more volatile than the S&P 500.

Profitability

This table compares Cognizant Technology Solutions and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cognizant Technology Solutions	11.75%	17.72%	12.60%
Cognizant Technology Solutions Competitors	-190.51%	-32.79%	-8.37%

Earnings and Valuation

This table compares Cognizant Technology Solutions and its peers top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Cognizant Technology Solutions	$21.11 billion	$2.23 billion	11.53
Cognizant Technology Solutions Competitors	$3.51 billion	$223.00 million	-20.32

Cognizant Technology Solutions has higher revenue and earnings than its peers. Cognizant Technology Solutions is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Institutional and Insider Ownership

92.4% of Cognizant Technology Solutions shares are held by institutional investors. Comparatively, 36.4% of shares of all “IT Services” companies are held by institutional investors. 0.4% of Cognizant Technology Solutions shares are held by company insiders. Comparatively, 20.4% of shares of all “IT Services” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Cognizant Technology Solutions pays an annual dividend of $1.32 per share and has a dividend yield of 2.1%. Cognizant Technology Solutions pays out 24.1% of its earnings in the form of a dividend. As a group, “IT Services” companies pay a dividend yield of 2.3% and pay out 71.0% of their earnings in the form of a dividend. Cognizant Technology Solutions has raised its dividend for 6 consecutive years.

Summary

Cognizant Technology Solutions beats its peers on 8 of the 15 factors compared.

Cognizant Technology Solutions Company Profile

Cognizant Technology Solutions is a professional services company that helps businesses use technology to modernize operations and develop digital capabilities. Its services include IT consulting, application development and maintenance, cloud and infrastructure services, data and artificial intelligence, engineering, and business process services. The company serves clients across industries including financial services, healthcare, manufacturing, communications, media, and retail. Its operations span North America, Europe, and Asia-Pacific, with a significant global delivery network.