In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Cognizant Tech Solns CTSH and its primary competitors in the IT Services industry. By closely examining key financial metrics, market position, and growth prospects, our aim is 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 | 17.17 | 2.74 | 1.84 | 4.07% | $0.87 | $1.69 | 0.82% |
| Accenture PLC | 30.93 | 8.14 | 3.32 | 5.38% | $2.62 | $5.18 | 3.64% |
| International Business Machines Corp | 20.46 | 6.27 | 2.40 | 7.53% | $3.38 | $8.02 | -4.67% |
| Infosys Ltd | 24.04 | 7.47 | 3.94 | 7.99% | $1.08 | $1.45 | 3.58% |
| Gartner Inc | 37.39 | 59.82 | 5.97 | 31.22% | $0.29 | $0.96 | 5.78% |
| Wipro Ltd | 18.86 | 3.02 | 2.39 | 3.87% | $38.12 | $65.97 | -0.11% |
| EPAM Systems Inc | 32.19 | 4.52 | 3.21 | 2.96% | $0.17 | $0.36 | -6.1% |
| Globant SA | 61.68 | 5.53 | 4.77 | 2.63% | $0.06 | $0.2 | 18.83% |
| Endava PLC | 40.15 | 4.95 | 3.80 | 2.11% | $0.02 | $0.05 | -3.95% |
| Perficient Inc | 21.79 | 4.28 | 2.47 | 4.62% | $0.04 | $0.07 | -1.92% |
| Formula Systems (1985) Ltd | 14.93 | 1.59 | 0.36 | 2.69% | $0.06 | $0.16 | 4.33% |
| CI&T Inc | 21.06 | 2.36 | 1.51 | 2.56% | $0.09 | $0.17 | -5.35% |
| The Hackett Group Inc | 17.72 | 7.52 | 2.16 | 12.25% | $0.01 | $0.03 | 5.31% |
| Information Services Group Inc | 15.41 | 1.92 | 0.70 | 3.06% | $0.01 | $0.03 | 4.27% |
| Computer Task Group Inc | 349.33 | 1.60 | 0.52 | -0.82% | $0.0 | $0.02 | -4.95% |
| CSP Inc | 22.51 | 2.67 | 1.67 | 5.5% | $0.0 | $0.01 | 32.88% |
| DecisionPoint Systems Inc | 14.45 | 2.30 | 0.41 | 5.48% | $0.0 | $0.01 | 5.55% |
| Average | 46.43 | 7.75 | 2.48 | 6.19% | $2.87 | $5.17 | 3.57% |
By closely examining Cognizant Tech Solns, we can identify the following trends:
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With a Price to Earnings ratio of 17.17, which is 0.37x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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With a Price to Book ratio of 2.74, significantly falling below the industry average by 0.35x, it suggests undervaluation and the possibility of untapped growth prospects.
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With a relatively low Price to Sales ratio of 1.84, which is 0.74x the industry average, the stock might be considered undervalued based on sales performance.
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With a Return on Equity (ROE) of 4.07% that is 2.12% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $870 Million, which is 0.3x below the industry average, potentially indicating 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 0.33x below the industry average, potentially indicating lower revenue after accounting for production costs.
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The company's revenue growth of 0.82% is significantly lower compared to the industry average of 3.57%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
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.
When examining Cognizant Tech Solns in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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When comparing the debt-to-equity ratio, Cognizant Tech Solns is in a stronger financial position compared to its top 4 peers.
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The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.11.
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's stock price is relatively undervalued. Additionally, Cognizant Tech Solns has a low ROE, EBITDA, gross profit, and revenue growth compared to its industry peers. This indicates that the company may be facing challenges in generating profits and driving revenue growth.
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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