I've been keeping an eye on Cognizant Technology Solutions Corporation (NASDAQ:CTSH) because I'm attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe CTSH has a lot to offer. Basically, it is a financially-sound company with a great history of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. If you're interested in understanding beyond my broad commentary, read the full report on Cognizant Technology Solutions here.
Solid track record with excellent balance sheet
Over the past year, CTSH has grown its earnings by 43%, with its most recent figure exceeding its annual average over the past five years. In addition to beating its historical values, CTSH also outperformed its industry, which delivered a growth of 11%. This is an optimistic signal for the future. CTSH's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that CTSH has sufficient cash flows and proper cash management in place, which is a crucial insight into the health of the company. CTSH's has produced operating cash levels of 3.23x total debt over the past year, which implies that CTSH's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
CTSH's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of CTSH's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the it industry, CTSH is also trading below its peers, relative to earnings generated. This supports the theory that CTSH is potentially underpriced.
For Cognizant Technology Solutions, I've compiled three important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for CTSH’s future growth? Take a look at our free research report of analyst consensus for CTSH’s outlook.
- Dividend Income vs Capital Gains: Does CTSH return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from CTSH as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CTSH? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.