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1. Company Snapshot

1.a. Company Description

Cognizant Technology Solutions Corporation, a professional services company, provides consulting and technology, and outsourcing services in North America, Europe, and internationally.It operates through four segments: Financial Services; Healthcare; Products and Resources; and Communications, Media and Technology.The company offers customer experience enhancement, robotic process automation, analytics, and AI services in areas, such as digital lending, fraud detection, and next generation payments; the shift towards consumerism, outcome-based contracting, digital health, delivering integrated seamless, omni-channel, and patient-centered experience; and services that drive operational improvements in areas, such as clinical development, pharmacovigilance, and manufacturing, as well as claims processing, enrollment, membership, and billing to healthcare providers and payers, and life sciences companies, including pharmaceutical, biotech, and medical device companies.


It also provides solution to manufacturers, retailers and travel and hospitality companies, as well as companies providing logistics, energy and utility services; and digital content, the creation of personalized user experience, and acceleration of digital engineering services to information, media and entertainment, and communications and technology companies.The company was founded in 1994 and is headquartered in Teaneck, New Jersey.

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1.b. Last Insights on CTSH

Cognizant Technology Solutions Corporation's recent performance was driven by its solid Q3 earnings and revenue beat, with quarterly earnings of $1.39 per share, surpassing estimates. AI-led productivity gains and major partnerships fueled investor confidence. The company's expanding clientele, robust pipeline, and favorable mix of new opportunities also contributed positively. Additionally, Cognizant's planned acquisition of 3Cloud, which deepens its AI and Azure capabilities, is expected to drive growth. Several investment firms, including AXQ Capital LP and ABN Amro Investment Solutions, have taken new positions in the company.

1.c. Company Highlights

2. Cognizant's Strong Q3 Earnings: AI-Driven Growth and Margin Expansion

Cognizant Technology Solutions reported a robust third quarter 2025 earnings, with revenue growth and adjusted operating margin exceeding expectations. Revenue grew 6.5% year-over-year in constant currency to $5.4 billion, driven by organic growth across all four operating segments. The company's adjusted operating margin expanded 50 basis points, and adjusted EPS grew approximately 11% to $1.39, beating analyst estimates of $1.3. The strong financial performance was accompanied by a significant increase in revenue per employee and margin per employee, which rose 8% and 10% year-over-year, respectively.

Publication Date: Oct -30

📋 Highlights
  • Revenue Growth & Margin Expansion:: Revenue rose 6.5% YoY to $5.4B, with adjusted operating margin expanding 50 bps to 15.7%.
  • AI-Driven Transformation:: 3,500+ AI engagements and 1,500 AI agents deployed, driving 8% revenue per employee growth and 10% margin per employee increase.
  • Capital Returns & Shareholder Value:: $1.5B returned to shareholders in Q3, with $2B target for 2025; free cash flow hit $1.2B (170% of adjusted net income).
  • Large Deal Momentum:: Signed 16 large deals ($100M+), up 40% YoY in trailing 12-month TCV, with 6.5% total contract value growth.
  • Guidance & AI Strategy Impact:: Raised full-year revenue guidance to 6–6.3% growth; 40% surge in AI innovation use cases to 3,500, leveraging multi-agent platforms and IP development.

AI-Driven Growth Strategy

Cognizant's AI builder strategy is driving growth, with a focus on AI-led productivity, industrializing AI, and agentifying the enterprise. The company has developed over 1,500 agents across the organization and has supported leading tech companies with training their machine learning systems. The company's AI-led innovation use cases have jumped 40% to 3,500, and it expects to see cost savings on software cycles being underwritten to innovation cycles. As Jatin Dalal, CFO, highlighted, the company's strong Q3 results demonstrate its ability to execute with discipline, driving improved revenue growth while investing in its people, technology, and partnerships to support its AI builder strategy.

Valuation and Outlook

With a P/E Ratio of 16.37 and an EV/EBITDA of 8.59, Cognizant's valuation appears reasonable, considering its strong growth prospects. The company's guidance for Q4 is 2.5-3.5% constant currency growth, with the upper end of the range reflecting additional momentum in revenue and bookings. Analysts estimate next year's revenue growth at 4.6%, indicating a positive outlook for the company. The company's commitment to returning capital to shareholders is evident, with $1.5 billion returned in 2025, bringing the total capital returned since 2022 to nearly $5 billion.

Segment Performance and Future Prospects

The company's Financial Services vertical has seen improved spending, transitioning from cost takeout consolidation to more innovation. The Healthcare vertical is also showing improvement, driven by the TriZetto asset and AI work. Cognizant is excited about its lead in the US market and is well-positioned to capitalize on the growing demand for AI-led services. The company's pyramid initiatives involve hiring freshers and AI, which is seen as a complementary strategy to accelerate the organization's journey on AI.

Conclusion on Growth Prospects

Cognizant's strong Q3 earnings, driven by its AI builder strategy, demonstrate its ability to execute and drive growth. With a healthy pipeline of large deals and small deals, the company is well-positioned for future growth. The company's focus on AI-led innovation and its commitment to returning capital to shareholders make it an attractive investment opportunity.

3. NewsRoom

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Cognizant double son engagement en faveur de Synapse en se fixant pour nouvel objectif d'atteindre deux millions de personnes d'ici à 2030

Dec -04

Source: prnewswire.com

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Cognizant verdoppelt sein Engagement für Synapse mit einem neuen Ziel von zwei Millionen bis 2030

Dec -04

Source: prnewswire.com

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Cognizant Doubles Down on Synapse Commitment with New Target to Reach Two Million by 2030

Dec -04

Source: prnewswire.com

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Cognizant and Merchants Fleet Set New Standard for Fleet Management Efficiency

Dec -03

Source: prnewswire.com

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5 Undervalued Stocks With Low Price-to-Sales Ratios & Strong Momentum

Dec -03

Source: zacks.com

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Boston Partners Has $145.96 Million Stake in Cognizant Technology Solutions Corporation $CTSH

Nov -27

Source: defenseworld.net

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AXQ Capital LP Takes $281,000 Position in Cognizant Technology Solutions Corporation $CTSH

Nov -25

Source: defenseworld.net

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Cognizant selected by CEPI to transform enterprise architecture and core ERP operations

Nov -20

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.67%)

6. Segments

Health Sciences

Expected Growth: 6.5%

Cognizant's Health Sciences growth of 6.5% is driven by increased demand for digital transformation, regulatory compliance, and data analytics in healthcare. Clients are seeking expertise in cloud migration, AI, and cybersecurity to improve patient outcomes and reduce costs. Cognizant's strong industry expertise and service offerings are capitalizing on these trends, driving growth in this segment.

Financial Services

Expected Growth: 4.2%

Cognizant's Financial Services growth (4.2%) is driven by digital transformation, increased adoption of cloud and AI, and expanding client relationships. The company's strong industry expertise, regulatory compliance capabilities, and investments in fintech partnerships also fuel growth. Additionally, its strategic acquisitions and geographic expansion contribute to the segment's growth.

Products and Resources

Expected Growth: 5.5%

Cognizant's Products and Resources segment growth of 5.5% is driven by increasing demand for digital solutions, strong performance in cloud-based services, and strategic acquisitions. The segment benefits from the company's focus on innovation, particularly in areas like AI, blockchain, and IoT, which enhances its offerings and expands its client base.

Communications, Media and Technology

Expected Growth: 7.0%

The Communications, Media and Technology segment growth of 7.0% is driven by increasing demand for digital transformation, 5G adoption, and cloud-native solutions. Cognizant's investments in AI, data analytics, and cybersecurity also fuel growth. Clients' focus on customer experience, operational efficiency, and innovation drive demand for the company's services, leading to strong revenue growth in this segment.

7. Detailed Products

Business Process Outsourcing (BPO) Services

Cognizant's BPO services provide end-to-end solutions for clients across various industries, leveraging technology and process expertise to deliver operational efficiency and cost savings.

Application Development and Maintenance (ADM) Services

Cognizant's ADM services provide clients with custom application development, implementation, and maintenance solutions across various technology platforms.

Digital Transformation Services

Cognizant's digital transformation services help clients navigate the digital landscape by providing solutions around digital strategy, design, and technology implementation.

Data and Analytics Services

Cognizant's data and analytics services provide clients with data strategy, data integration, and advanced analytics solutions to drive business insights and decision-making.

Cloud Services

Cognizant's cloud services provide clients with end-to-end cloud solutions, including migration, management, and optimization of cloud infrastructure and applications.

Cybersecurity Services

Cognizant's cybersecurity services provide clients with threat detection, incident response, and security consulting solutions to protect their digital assets.

Artificial Intelligence (AI) and Machine Learning (ML) Services

Cognizant's AI and ML services provide clients with solutions that leverage AI and ML technologies to drive business innovation and efficiency.

8. Cognizant Technology Solutions Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Cognizant's services are highly specialized and integrated with clients' businesses, making substitutes less viable. The company's focus on digital transformation, cloud, and data analytics makes it difficult for clients to switch to alternative providers.

Bargaining Power Of Customers

Cognizant's clients are large enterprises with significant negotiating power. However, the company's strong reputation, expertise, and long-term relationships with clients mitigate this power to some extent.

Bargaining Power Of Suppliers

Cognizant has a large pool of potential suppliers, which reduces the bargaining power of individual suppliers. The company's scale and negotiating power also enable it to secure favorable terms from suppliers.

Threat Of New Entrants

The IT services industry has high barriers to entry, including significant investments in talent, technology, and marketing. Cognizant's strong brand, global presence, and expertise in emerging technologies make it difficult for new entrants to compete.

Intensity Of Rivalry

The IT services industry is highly competitive, with many established players competing for market share. Cognizant competes with large players like Accenture, Infosys, and TCS, as well as smaller, niche providers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 9.32%
Debt Cost 4.82%
Equity Weight 90.68%
Equity Cost 8.88%
WACC 8.50%
Leverage 10.27%

11. Quality Control: Cognizant Technology Solutions Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Broadridge Financial Solutions

A-Score: 5.9/10

Value: 2.0

Growth: 7.0

Quality: 6.4

Yield: 4.0

Momentum: 6.0

Volatility: 10.0

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IBM

A-Score: 5.5/10

Value: 1.5

Growth: 3.0

Quality: 6.3

Yield: 6.0

Momentum: 8.0

Volatility: 8.3

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Cognizant

A-Score: 5.5/10

Value: 5.5

Growth: 4.8

Quality: 7.5

Yield: 3.0

Momentum: 3.0

Volatility: 9.0

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Gartner

A-Score: 4.3/10

Value: 4.1

Growth: 8.1

Quality: 7.7

Yield: 0.0

Momentum: 0.5

Volatility: 5.3

1-Year Total Return ->

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FIS

A-Score: 4.3/10

Value: 2.7

Growth: 3.6

Quality: 4.4

Yield: 5.0

Momentum: 2.0

Volatility: 8.0

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Fiserv

A-Score: 4.2/10

Value: 6.6

Growth: 8.1

Quality: 6.4

Yield: 0.0

Momentum: 1.0

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

80.72$

Current Price

80.72$

Potential

-0.00%

Expected Cash-Flows