Comparing Cognizant Technology Solutions (NASDAQ:CTSH) and Grid Dynamics (NASDAQ:GDYN)

Grid Dynamics (NASDAQ:GDYN) and Cognizant Technology Solutions (NASDAQ:CTSH) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Institutional & Insider Ownership

71.2% of Grid Dynamics shares are owned by institutional investors. Comparatively, 92.4% of Cognizant Technology Solutions shares are owned by institutional investors. 7.2% of Grid Dynamics shares are owned by company insiders. Comparatively, 0.3% of Cognizant Technology Solutions shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Grid Dynamics and Cognizant Technology Solutions”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Grid Dynamics	$350.57 million	2.06	$4.04 million	$0.19	44.84
Cognizant Technology Solutions	$19.74 billion	1.68	$2.24 billion	$4.92	13.78

Cognizant Technology Solutions has higher revenue and earnings than Grid Dynamics. Cognizant Technology Solutions is trading at a lower price-to-earnings ratio than Grid Dynamics, indicating that it is currently the more affordable of the two stocks.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Grid Dynamics	4.37%	1.89%	1.64%
Cognizant Technology Solutions	11.89%	16.77%	12.34%

Volatility and Risk

Grid Dynamics has a beta of 1.04, suggesting that its share price is 4% more volatile than the S&P 500. Comparatively, Cognizant Technology Solutions has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Grid Dynamics and Cognizant Technology Solutions, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Grid Dynamics	1	0	5	0	2.67
Cognizant Technology Solutions	0	11	5	0	2.31

Grid Dynamics presently has a consensus price target of $14.80, suggesting a potential upside of 73.71%. Cognizant Technology Solutions has a consensus price target of $86.79, suggesting a potential upside of 28.00%. Given Grid Dynamics’ stronger consensus rating and higher possible upside, equities analysts plainly believe Grid Dynamics is more favorable than Cognizant Technology Solutions.

Summary

Cognizant Technology Solutions beats Grid Dynamics on 7 of the 13 factors compared between the two stocks.

About Grid Dynamics

Grid Dynamics Holdings, Inc., together with its subsidiaries, provides technology consulting, platform and product engineering, and analytics services in North America, Europe, and internationally. It offers cloud platform and product engineering services, such as architecting, designing, and building scalable and secure cloud-based platforms and business applications; and AI/machine learning and data platform engineering services that build platforms to facilitate batch and streaming data ingestion, quality governance, orchestration, semantic modeling, observability, and analysis at scale. The company provides digital engagement services, including digital ecosystem design and implementation; and supply chain, Internet of Thing, and advanced manufacturing, which focuses on transforming traditional operations into smart and connected ecosystems. It serves customers that operate in the tech, media, telecommunications, retail, consumer packaged goods, manufacturing, and finance industries. The company was formerly known as ChaSerg Technology Acquisition Corp. and changed its name to Grid Dynamics Holdings, Inc. Grid Dynamics Holdings, Inc. was founded in 2006 and is headquartered in San Ramon, California.

About Cognizant Technology Solutions

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 provides customer experience, 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 offers solution to manufacturers, automakers, retailers and travel and hospitality companies, as well as companies providing logistics, energy and utility services; and digital content, business process improvement, technology modernization, and the creation of unified and compelling user experience services to communications, media and entertainment, education, and information services and technology companies. The company was incorporated in 1988 and is headquartered in Teaneck, New Jersey.