In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Cognizant Tech Solns CTSH alongside its primary competitors in the IT Services industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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 | 18.26 | 2.91 | 1.96 | 4.07% | $0.87 | $1.69 | 0.82% |
| Accenture PLC | 32.25 | 8.18 | 3.44 | 7.54% | $2.97 | $5.45 | 3.03% |
| International Business Machines Corp | 20.92 | 6.42 | 2.46 | 7.53% | $3.38 | $8.02 | 4.58% |
| Infosys Ltd | 26.51 | 8.10 | 4.21 | 7.58% | $0.96 | $1.39 | 0.09% |
| Gartner Inc | 38.23 | 61.17 | 6.10 | 31.22% | $0.29 | $0.96 | 5.78% |
| Wipro Ltd | 20.80 | 3.33 | 2.64 | 3.87% | $38.12 | $65.97 | -0.11% |
| EPAM Systems Inc | 37.37 | 5.24 | 3.72 | 2.96% | $0.17 | $0.36 | -6.1% |
| Globant SA | 63.73 | 5.71 | 4.93 | 2.63% | $0.06 | $0.2 | 18.83% |
| Endava PLC | 46.83 | 5.78 | 4.43 | 2.11% | $0.02 | $0.05 | -3.95% |
| Perficient Inc | 22.74 | 4.47 | 2.58 | 4.62% | $0.04 | $0.07 | -1.92% |
| Formula Systems (1985) Ltd | 15.78 | 1.68 | 0.38 | 2.69% | $0.06 | $0.16 | 4.33% |
| CI&T Inc | 20.19 | 2.26 | 1.44 | 2.56% | $0.09 | $0.17 | -5.35% |
| The Hackett Group Inc | 18.03 | 7.65 | 2.20 | 12.25% | $0.01 | $0.03 | 5.31% |
| Information Services Group Inc | 16.59 | 2.07 | 0.75 | 3.06% | $0.01 | $0.03 | 4.27% |
| CSP Inc | 18.26 | 2.04 | 1.38 | 2.92% | $0.0 | $0.01 | -8.14% |
| DecisionPoint Systems Inc | 15.32 | 2.44 | 0.44 | 5.48% | $0.0 | $0.01 | 5.55% |
| Average | 27.57 | 8.44 | 2.74 | 6.6% | $3.08 | $5.53 | 1.75% |
By conducting an in-depth analysis of Cognizant Tech Solns, we can identify the following trends:
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The stock's Price to Earnings ratio of 18.26 is lower than the industry average by 0.66x, suggesting potential value in the eyes of market participants.
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Considering a Price to Book ratio of 2.91, 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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With a relatively low Price to Sales ratio of 1.96, which is 0.72x the industry average, the stock might be considered undervalued based on sales performance.
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The company has a lower Return on Equity (ROE) of 4.07%, which is 2.53% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $870 Million is 0.28x below the industry average, suggesting potential 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 1.75%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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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In terms of the debt-to-equity ratio, Cognizant Tech Solns has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.11.
Key Takeaways
Cognizant Tech Solns has a low PE ratio, indicating that its stock price is relatively low compared to its earnings. The low PB ratio suggests that the company's stock is undervalued based on its book value. The low PS ratio indicates that the stock is trading at a lower price relative to its sales.
On the other hand, the low ROE suggests that the company is not generating significant returns on its shareholders' equity. The low EBITDA indicates that the company's operating profitability is relatively low. The low gross profit suggests that the company's revenue after deducting the cost of goods sold is not substantial. Lastly, the low revenue growth indicates that the company's sales growth is relatively slow compared to its peers in the IT services industry.
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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