Download PDF

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.

Show Full description

1.b. Last Insights on CTSH

Cognizant Technology Solutions Corporation faced negative drivers, including reduced institutional investor holdings. ProShare Advisors LLC and S&CO Inc. decreased their stakes by 17.7% and 20.1%, respectively. Despite beating Q4 earnings and revenue estimates with $1.35 per share, rising medical care costs and macroeconomic uncertainty may impact growth. Additionally, Frontier Capital Management Co. LLC cut its holdings by 57.4%. However, the company raised its 2025 and 2026 outlook, citing strengthened demand. (Source: MarketBeat Ratings: "Hold" rating)

1.c. Company Highlights

2. Cognizant's Strong Q4 and Full-Year 2025 Earnings

Cognizant Technology Solutions reported a robust fourth-quarter and full-year 2025 earnings, with revenue growing 3.8% year-over-year in constant currency in Q4, driven by North America, and 6.4% for the full year, surpassing the $20 billion mark. The company achieved an adjusted operating margin of 16% in Q4, a 30-basis-point improvement year-over-year, and 15.8% for the full year, exceeding guidance. Adjusted diluted EPS was $1.35, up 12% year over year, beating analyst estimates of $1.32.

Publication Date: Feb -05

📋 Highlights
  • Revenue & Margin Growth:: Full-year 2025 revenue surpassed $20 billion (+6.4% YoY), with Q4 adjusted operating margin at 16% (+30 bps YoY).
  • Large Deal Momentum:: Signed 28 TCV $100M+ deals in 2025 (total TCV up 50% YoY), including a $1B+ Q4 deal.
  • Shareholder Returns:: Returned $2 billion to shareholders via dividends and buybacks in 2025, with $500 million returned in Q4 alone.
  • AI Integration:: Over 4,000 AI engagements active, with 32% of code development AI-assisted, driving productivity and differentiation.
  • 2026 Guidance:: Projects 4-6.5% constant currency revenue growth, 15.9-16.1% adjusted operating margin, and 5-8% EPS growth.

Financial Performance Highlights

The company's financial performance was strong, with revenue growth and adjusted operating margin outpacing expectations. The financial services segment led growth, with a 7% constant currency revenue increase for the full year. Cognizant's guidance implies stronger sequential growth in the second and third quarters compared to 2025, driven by the ramp-up of deals and seasonality.

Valuation Metrics

With a P/E Ratio of 16.55, P/B Ratio of 2.46, and ROE of 14.84%, the market has already priced in Cognizant's strong growth prospects. The company's EV/EBITDA ratio of 8.8 suggests a reasonable valuation. The Dividend Yield of 1.62% and Free Cash Flow Yield of 6.93% indicate a decent return for shareholders.

AI-Driven Growth Strategy

Cognizant's CEO, Ravi Kumar, highlighted the company's successful execution on its strategic priorities, including scaling AI-led investments and expanding its platform strategy. The company has over 4,000 AI engagements, and over 30% of its developer effort in software development cycles is AI-assisted. Cognizant's AI Builder strategy is driving demand, and it sees AI as a tailwind, not a headwind, with a significant opportunity to apply AI to traditional software and capture new surface area in enterprises.

Bookings Growth and Deal Activity

The company signed 12 large deals with a total contract value (TCV) of $100 million or greater in Q4, including one deal valued at over $1 billion. For the full year, Cognizant signed 28 deals with a TCV above $100 million, with a combined TCV up nearly 50% versus the previous year. Bookings growth was driven by large deals, with a 9% year-over-year growth in Q4.

Outlook and Guidance

Cognizant expects revenue growth of 4-6.5% in constant currency in 2026, with an inorganic contribution of approximately 150 basis points. The company expects adjusted operating margin of 15.9-16.1% and EPS growth of 5-8%. Analysts estimate next year's revenue growth at 5.7%, indicating a steady trajectory for the company.

3. NewsRoom

Card image cap

Cognizant: Buying More After The Dip

Feb -18

Source: seekingalpha.com

Card image cap

Cognizant to provide strategic technology services for Wallenius Wilhelmsen

Feb -17

Source: prnewswire.com

Card image cap

Anthropic Revenue Run Rate Climbs to $14 Billion Amid India Push

Feb -16

Source: gurufocus.com

Card image cap

Cognizant Expands Strategic Partnership with Google Cloud to Operationalize Agentic AI at Enterprise Scale

Feb -16

Source: prnewswire.com

Card image cap

Here Are The Most Overvalued And Undervalued U.S. Tech Stocks

Feb -11

Source: seekingalpha.com

Card image cap

Is the Options Market Predicting a Spike in Cognizant Stock?

Feb -10

Source: zacks.com

Card image cap

DAMAC Group works with Cognizant as strategic partner to transform IT operations and elevate customer experience

Feb -10

Source: prnewswire.com

Card image cap

Cognizant Technology Solutions Corporation $CTSH Shares Sold by S&CO Inc.

Feb -10

Source: defenseworld.net

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

1-Year Total Return ->

View Full Report
Stock-Card
Cognizant

A-Score: 5.7/10

Value: 4.9

Growth: 4.7

Quality: 7.6

Yield: 3.0

Momentum: 5.0

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
IBM

A-Score: 5.7/10

Value: 1.8

Growth: 3.0

Quality: 6.0

Yield: 6.0

Momentum: 9.0

Volatility: 8.3

1-Year Total Return ->

View Full Report
Stock-Card
FIS

A-Score: 4.4/10

Value: 2.8

Growth: 3.6

Quality: 4.4

Yield: 5.0

Momentum: 2.5

Volatility: 8.0

1-Year Total Return ->

View Full Report
Stock-Card
Fiserv

A-Score: 4.3/10

Value: 7.5

Growth: 8.1

Quality: 6.4

Yield: 0.0

Momentum: 0.0

Volatility: 3.7

1-Year Total Return ->

View Full Report
Stock-Card
Gartner

A-Score: 4.2/10

Value: 3.5

Growth: 8.1

Quality: 8.0

Yield: 0.0

Momentum: 0.5

Volatility: 5.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

65.03$

Current Price

65.03$

Potential

-0.00%

Expected Cash-Flows