In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Cognizant Tech Solns CTSH against its key competitors in the IT Services industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.
Cognizant Tech Solns Background
Cognizant is a global IT services provider, offering consulting and outsourcing services to some of the world's largest enterprises spanning the financial services, media and communications, healthcare, natural resources, and consumer products industries. Cognizant employs nearly 300,000 people globally, roughly 70% of whom are in India, although the company's headquarters are in Teaneck, New Jersey.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Cognizant Technology Solutions Corp | 16.71 | 2.67 | 1.79 | 4.07% | $0.87 | $1.69 | 0.82% |
| Accenture PLC | 30.39 | 8 | 3.26 | 5.38% | $2.62 | $5.18 | 3.64% |
| International Business Machines Corp | 19.75 | 6.06 | 2.32 | 7.53% | $3.38 | $8.02 | -4.67% |
| Infosys Ltd | 23.66 | 7.35 | 3.87 | 7.99% | $1.08 | $1.45 | 3.58% |
| Gartner Inc | 36.12 | 57.79 | 5.76 | 31.22% | $0.29 | $0.96 | 5.78% |
| Wipro Ltd | 18.17 | 2.90 | 2.30 | 3.87% | $38.12 | $65.97 | -0.11% |
| EPAM Systems Inc | 31.91 | 4.48 | 3.18 | 2.96% | $0.17 | $0.36 | -6.1% |
| Globant SA | 53.07 | 4.76 | 4.11 | 2.31% | $0.05 | $0.18 | 15.91% |
| Endava PLC | 30.02 | 4.92 | 3.55 | 4.16% | $0.03 | $0.06 | 5.2% |
| Perficient Inc | 22.12 | 4.34 | 2.51 | 4.62% | $0.04 | $0.07 | -1.92% |
| Formula Systems (1985) Ltd | 14.34 | 1.58 | 0.35 | 2.98% | $0.06 | $0.16 | 2.9% |
| CI&T Inc | 21.53 | 2.56 | 1.56 | 3.44% | $0.1 | $0.2 | 8.92% |
| The Hackett Group Inc | 17.66 | 7.50 | 2.16 | 12.25% | $0.01 | $0.03 | 5.31% |
| Information Services Group Inc | 16.07 | 2.01 | 0.73 | 3.06% | $0.01 | $0.03 | 4.27% |
| Computer Task Group Inc | 347.33 | 1.59 | 0.52 | -0.82% | $0.0 | $0.02 | -4.95% |
| CSP Inc | 20.68 | 2.45 | 1.53 | 5.5% | $0.0 | $0.01 | 32.88% |
| Average | 46.85 | 7.89 | 2.51 | 6.43% | $3.06 | $5.51 | 4.71% |
Through an analysis of Cognizant Tech Solns, we can infer the following trends:
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At 16.71, the stock's Price to Earnings ratio is 0.36x less than the industry average, suggesting favorable growth potential.
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Considering a Price to Book ratio of 2.67, which is well below the industry average by 0.34x, the stock may be undervalued based on its book value compared to its peers.
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The Price to Sales ratio is 1.79, which is 0.71x the industry average. This suggests a possible undervaluation based on sales performance.
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With a Return on Equity (ROE) of 4.07% that is 2.36% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $870 Million, which is 0.28x below the industry average, the company may face lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $1.69 Billion, which indicates 0.31x below the industry average, potentially indicating lower revenue after accounting for production costs.
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The company is witnessing a substantial decline in revenue growth, with a rate of 0.82% compared to the industry average of 4.71%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
By considering the Debt-to-Equity ratio, Cognizant Tech Solns can be compared to its top 4 peers, leading to the following observations:
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Compared to its top 4 peers, Cognizant Tech Solns has a stronger financial position indicated by its lower debt-to-equity ratio of 0.11.
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This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.
Key Takeaways
The valuation analysis for Cognizant Tech Solns in the IT Services industry indicates that its PE, PB, and PS ratios are low compared to its peers. This suggests that the company may be undervalued in terms of its earnings, book value, and sales. However, its low ROE, EBITDA, gross profit, and revenue growth indicate potential challenges in generating profitability and growth compared to its industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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