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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Cognizant Technology Solutions Corporation (XNAS:CTSH) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
CTSH
Name:
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION (XNAS:CTSH)
Sector:
186.00M
Industry:
Information Technology Services
CEO:
Mr. Brian Humphries
Total Employees:
341,300
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -91.94% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION(CTSH) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND INFORMATION TECHNOLOGY SERVICES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
62.33
One Month Price Target:
$62.7
Six Month Price Target :
$64.55
Likely Price in One Year's Time:
Ticker:
$66.78
Likely Trading Range Today Under (Normal Volatility)
$62.11
Price Upper limit ($) :
$62.59
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$59.45
This week:
$55.89
This month :
$49.46
Other Primary facts
Market Cap:
32.22B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
517.78M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
14.96%
-17.18%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$75.69
$69.57
$48.97
$55.09
Medium risk (<10%) entry points
Buy Call
Sell Call
$67.58
Buy Put:
Sell Put:
$66.28
$57.06
$58.38
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
CTSH
Sharpe Ratio:
0.92%
Comparison:
CTSH, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is -49.32% lower than the industry
& is -59.70% lower than the market/S&P 500 average
Average Returns/Yield of
CTSH
Daily returns:
0.03%
Weekly returns:
0.15%
Monthly returns:
0.59%
Yearly returns:
14.44%
Comparison of returns:
Average annual returns/yield (last 3 years) is -50.74% below industry average
Classification:
CTSH, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.77
Statistical test of Returns:
CTSH has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.26%
Weekly Volatility:
5.06%
Monthly Volatility:
10.12%
Yearly Volatility:
35.05%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.09%
Volatility in last five trading days has been -51.63% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.62%
Weekly VaR:
-10.32%
Monthly VaR:
-20.65%
How Much Can the price of
CTSH
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-18%
Worst case (decline):
-71.53%
This translates to price declining to:
$51.16
This translates to price declining to:
$17.75
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
CTSH is a 45.74% riskier investment compared to the market/S&P 500 & is 24.85% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -25.43% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
CTSH
Beta in relation to market/S&P 500--1.06
Expected beta in 1 year's time:
0.874
Expected beta in 3 year's time:
1.236
Unlevered (debt free) Beta:
0.977
Beta in relation to Nasdaq (XNAS):
0.873
Beta in relation to all global stocks::
0.848
Beta Comparison & Analysis
Beta of competitors/peers::
1.15
Beta is -7.63% lower than peers
Average Industry Beta:
1.209
Beta is -12.12% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
14.13%
Sustainable growth rate is -90.51% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.033
Alpha is -210.26% below industry average alpha yield
Alpha is -211% below the market average
Analysis of Cost of Capital of
CTSH
Equity cost of capital:
0.104
Equity cost of capital is -8.78% below industry mean WACC
Unlevered (without debt) cost of capital:
9.59%
Before-tax cost of debt:
0.56%
After-tax cost of debt:
0.44%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
0.44%
WACC is 13.52% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$36.56
Revenue growth rate per share of (3Y):
2.7
Annual revenue growth rate is 47.62% above the industry average
EPS:
$4.17
Expected Annual growth rate of EPS (3Y):
7.06%
Expected future EPS growth rate is 108.27% higher than the Information Technology Services industry
Free cash flow (FCF) per share:
$4.37
Balance sheet equity growth per share: 20.57%
Equity growth rate per share is -34.39% lower than the industry
Debt per share
$2.66
EBITDA per share
$6.73
Valuation Analysis Today of
CTSH
P/E Ratio:
14.47
P/E Ratio of Competitors/Peers:
169.06
P/E ratio is -91.44% lower than main peers & is -69.51% lower than the industry
Stock price/value with industry average P/E ratio: $197.94
CTSH is -68.51% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $68.49
Present value of the expected future dividends only: $14.48
P/S (Price to Sales ratio):
1.7
Price to sales ratio is -53.32% below the industry mean
P/B (Price to book value ratio):
2.7
Price to free cash flow: 14.26
Price to free cash flow ratio is -3.49% lower than the industry
Net income growth rate (3Y):
12.76%
Net income growth rate is -99.98% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 6.51%
Dividend yeild: 1.64%
Previous Dividend: $0.27
Previous adjusted dividend: $0.27
Previous Dividend: $1.02
Expected next dividend best case: $0.29
Expected next dividend worst case: $0.25
Average dividend payment (long-term): $0.23
Average dividend increase/decrease (growth rate) % per period: 3.16%
Expected next dividend payment date: 29/08/2022
Expected next dividend record date: 18/08/2022
Expected next dividend declaration date: 08/02/2022
Previous dividend payment date: 31/05/2022
Previous dividend record date: 20/05/2022
Previous dividend declaration date: 05/04/2022
Dividend History:
2022-05-19--$0.27
2021-11-18--$0.24
2021-05-19--$0.24
2022-02-17--$0.27
2021-08-19--$0.24
2021-02-17--$0.24
Dividend growth rate is -143.90% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
11.48%
Net debt to equity ratio:
-4.89%
Debt to assets ratio:
7.89%
Net debt to assets ratio:
-3.36%
Debt-to-asset ratio is -87.57% below industry average
Ability to repay debt:
Interest coverage ratio:
387
Interest coverage ratio is 826.28% more than industry average
Looking forward:
Debt growth rate:
-6.60%
Annual debt growth is -211% lower than industry average debt growth rate
Debt repayment rate in last quarter: 1.01%
Analysis of Key Statistics
Correlation of price movement with the market:
0.78
Statistical significance of correlation:
CTSH has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.596
Stock price is 30.84% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.596
Correlation of price movement with Nasdaq (^IXIC):
0.017
Covariance of price movement with the market:
0.022
Kurtosis
11.785
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.202
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
CTSH
Gross Profit Margin Ratio:
148%
Operating Profit Margin Ratio:
15.22%
Operating profit margin is -319.17% lower than the industry
Net Profit Margin Ratio:
148%
Effective Tax Rate:
24.32%
Effective tax rate is -7.90% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
18.33%
Return on equity (ROE) is -67.41% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
12.59%
Return on assets (ROA) is 14648.90% higher than the industry
Financial Leverage:
1.1x
Current Ratio:
2.22
Current ratio is -4.07% below industry average
Cash Conversion Cycle (days):
58.8
Cash conversion cycle is 56.85% above industry average
The remaining useful life of property plant & equipment is: 5.5 years
Stock based compensation to net income ratio:
2.55%
In-depth Efficiency Analysis
Revenue generated per employee:
55.5K
Each employee generates -87% less revenue than industry average revenue per employee
EBITDA generated per employee:
10.2K
Each employee generates -77% less EBITDA than industry average revenue per employee
Profit generated per employee:
6.4K
Each employee generates -24% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
0.5K
Each employee generates -108% less free cash flow than industry average revenue per employee
Assets/Capital per employee
30.3K
Each employee generates -108% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
CTSH
CADENCE DESIGN SYSTEMS, INC. (XNAS:CDNS)
MICROCHIP TECHNOLOGY INCORPORATED (XNAS:MCHP)
XILINX, INC. (XNAS:XLNX)
CROWDSTRIKE HOLDINGS, INC. (XNAS:CRWD)
SYNOPSYS, INC. (XNAS:SNPS)
FORTINET, INC. (XNAS:FTNT)
THE TRADE DESK, INC. (XNAS:TTD)
Telefonaktiebolaget LM Ericsson (XNAS:ERIC)
ZSCALER, INC. (XNAS:ZS)
Current Analyst Ratings
Strong buy�42%
Buy�58%
Hold�38%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
18.93B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
11.94B
7.00B
-
-
3.54B
-
576.00M
4.11B
27.00M
9.00M
576.00M
3.48B
2.88B
2.20B
2.89B
703.00M
2.20B
Statement of Cash Flow
Date:
Period:
143.00M
Differed Income Tax :
70.00M
Stock Based Compensation :
56.00M
Change in Working Capital :
- 553000.00K
Accounts Receivables:
- 117000.00K
Other Working Capital:
36.00M
Other Non-Cash Items:
27.00M
Net Cash Provided by Operating Activities:
306.00M
Investments in PP&E:
- 120000.00K
Net Acquisitions:
19.00M
Purchases of Investments:
- 120000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
2.19B
127.00M
2.32B
3.66B
-
1.10B
7.08B
2.09B
5.61B
1.17B
458.00M
333.00M
708.00M
10.36B
-
17.43B
394.00M
232.00M
57.00M
455.00M
2.11B
3.19B
1.38B
664.00M
2.28B
-
5.46B
5.00M
11.96B
- 19000.0K
31.00M
March 31, 2022 at 6:00:00 AM
16.05B
11.97B
17.43B
585.00M
1.61B
- 585000.0K
921.00M
-
700.00M
- 14000.00K
-
- 474000.00K
- 143000.00K
31.00M
- 600000.00K
- 6000.00K
400.00M
2.19B
1.79B
306.00M
- 120000.00K
186.00M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
CTSH
2023
2024
2025
2026
2027
$67.11
$264.19
$283.05
$303.25
$324.90