CTSH — Cognizant Technology Solutions Corp
Snapshot dated September 30, 2026.
Cognizant Technology Solutions provides information technology, consulting, and business process outsourcing services to a diverse global client base. The company organizes its operations into four primary segments: Financial Services, Healthcare, Products & Resources, and Communications, Media & Technology. Its core service offerings involve digital engineering, cloud modernization, data analytics, and artificial intelligence integration intended to optimize enterprise business operations. Cognizant functions as a large-scale IT services provider, competing directly with firms such as Accenture, Infosys, and Tata Consultancy Services. It maintains an extensive global delivery network with a significant workforce presence, particularly in India and North America. Recently, the company has focused its strategy on pivoting its service portfolio toward cloud, digital, and generative AI initiatives to align with changing technology spending priorities among its corporate clients.
Fair Value / Share
$63.50
Price on September 30, 2026
$57.10
Upside to fair value
11.22%
Margin of safety 10.1%
Upside is measured against what you pay; margin of safety is measured against what the business is worth.
Data by Equibles and SEC filings. Figures are as of September 30, 2026 and are not live.
Earnings Yield
Earnings Yield shows how much profit a company generates relative to its share price. EPS ÷ Stock Price.
Stock Price
$57.10
Market Cap
$27,236,700,000
Net Income (TTM)
$2,229,000,000
Diluted Shares
477.0 million
EPS (TTM)
$4.67
Earnings Yield
8.18%
AI Analysis
Cognizant currently produces an earnings yield of 8.18%, calculated using an EPS of $4.67 and a stock price of $57.10. This yield sits above the 4-5% annual return typically available from a safe, guaranteed alternative like a bond. This spread implies that the market is currently pricing each dollar of the company’s annual earnings at a lower multiple compared to safe, fixed-income assets. This result would change if the earnings per share increased or if the stock price fluctuated significantly. However, this metric focuses strictly on the relationship between current price and historical earnings and does not account for future growth trajectories, debt levels, or the sustainability of current profit margins.
Return on Capital
EBIT ÷ (Net Working Capital + Net Fixed Assets) — how efficiently the business turns capital into profit.
EBIT (TTM)
$3,379,000,000
Net Working Capital
$2,844,000,000
Net Fixed Assets
$955,000,000
Invested Capital
$3,799,000,000
Return on Capital
88.94%
AI Analysis
Cognizant Technology Solutions Corp (CTSH) generated $3.4B in EBIT against $3.8B in invested capital—a figure derived from $2.8B in net working capital and $955M in net fixed assets. This calculation yields a return on capital of 88.94%. This framework benchmarks an efficient use of capital at roughly 30% or more, positioning this result significantly above that threshold. By measuring EBIT relative to the tangible capital needed to operate, this ratio evaluates how much profit the business extracts from its operational base, ignoring external financing or tax strategies. While this provides a snapshot of capital efficiency, the metric does not account for variations in capital intensity between different industries or the specific reinvestment needs of businesses in early growth phases, which can influence the final percentage.
Acquirer's Multiple
Enterprise Value ÷ Operating Earnings — how many years of operating earnings it would take to buy the whole business.
| Company | Operating earnings | Enterprise value | Multiple |
|---|---|---|---|
| CTSHCognizant Technology Solutions Corp | $3.4B | $26.3B | 7.8x |
| EPAMEPAM Systems, Inc. | $563.2M | $4.8B | 8.6x |
| ACNAccenture plc | $10.6B | $105.8B | 10.0x |
Where CTSH sits: 7.8x against a peer median of 9.3x (peers: 10.0x and 8.6x) — 16.1% below the median.
Show the enterprise value bridge for each companyHide the enterprise value bridge
CTSH
Debt $568M. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $524M of operating lease liabilities as of 2026-03-31 ($384M non-current, $140M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
ACN
Named as a competitor: Direct global competitor in IT consulting and digital transformation services
Debt $5.1B. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $3.2B of operating lease liabilities as of 2026-05-31 ($2.5B non-current, $750.9M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
EPAM
Named as a competitor: Competes in digital engineering and custom software development services
Debt $25M. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $127.2M of operating lease liabilities as of 2026-06-30 ($87.9M non-current, $39.3M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
Operating earnings — CTSH
AI Analysis
Cognizant Technology Solutions Corp (CTSH) has an Acquirer's Multiple of 7.8x, calculated by dividing its $26.3B enterprise value by its $3.4B in TTM operating earnings. Among the companies analyzed, ACN has the highest multiple at 10.0x, derived from a $105.8B enterprise value and $10.6B in operating earnings. EPAM holds a multiple of 8.6x, based on a $4.8B enterprise value and $563.2M in operating earnings. CTSH currently carries the lowest multiple of the group. The computed comparison for CTSH is 7.8x against a peer median of 9.3x (peers: 10.0x and 8.6x) — 16.1% below the median. This ratio measures the price paid for core operating profitability. This comparison would change if the companies' relative capital structures shift, such as significant changes in debt, or if their respective operating earnings growth rates diverge, causing the market to adjust its expectation for future earning power.
FS-Score
A 10-check read on financial health, across profitability, balance-sheet stability and operating momentum.
FS-Score
8/10
This company scores high on profitability, stability, and momentum.
Section 1
Current Profitability
3/3
Profitability is Strong, as the company is generating positive net income and free cash flow relative to its asset base while maintaining cash-backed earnings.
- Return on Assets is positive at 10.78%
- Free Cash Flow to Total Assets is positive at 12.54%
- Accruals check passes with a ratio of 1.29, meaning cash from operations exceeds net income
This section indicates high earnings quality; the score would only decline if cash flow fell below accounting profits or if the company began generating net losses.
Return on Assets (ROA > 0)
PassFree Cash Flow to Total Assets (FCFTA > 0)
PassAccruals (CFO / Net Income > 1)
PassSection 2
Stability
3/3
The balance sheet is Strong, characterized by decreasing leverage, improved liquidity, and a reduction in the total share count.
- Leverage decreased slightly from 0.04 to 0.03 year over year
- Liquidity improved as the current ratio rose from 2.09 to 2.14
- Net dilution is negative, with shares falling to 489.0 million from 497.0 million
These measures suggest the company is not currently reliant on outside capital; an increase in debt or a resumption of share issuance would weaken this result.
Change in Leverage (↓ or unchanged)
PassChange in Liquidity (↑ Current Ratio)
PassNet Dilution (annual diluted weighted-average shares, this year vs last)
PassSection 3
Recent Operational Improvements
2/4
Operational trends are Mixed, as gains in cash flow efficiency and asset turnover were offset by slight declines in profitability and margins.
- Return on Assets softened from 11.22% to 10.78%
- Free Cash Flow to Total Assets improved from 9.15% to 12.54%
- Gross Margin declined from 34.34% to 33.72%
- Asset Turnover increased from 0.99 to 1.02
The mixed result stems from a trade-off between higher asset efficiency and compressed margins; a recovery in pricing power or cost control would be required to sweep all four checks.
Change in ROA (↑)
FailChange in FCFTA (↑)
PassChange in Gross Margin (↑)
FailChange in Asset Turnover (↑)
PassFramework conclusion
The company achieves a total score of 8/10, driven by strong profitability and balance sheet stability despite some unevenness in recent operational improvements. This high score suggests that the business remains financially healthy, making it less likely that its market pricing is the result of fundamental distress. While the score identifies structural stability, it does not account for future growth expectations or broader industry cycles.
- The 12.54% FCFTA shows the business is generating more cash relative to its assets than in the prior year
- A current ratio of 2.14 indicates a healthy margin of safety for meeting short-term obligations
- The 1.29 accruals ratio suggests earnings are well-supported by actual cash inflows
- Diluted shares outstanding fell to 489.0 million, reflecting a lack of shareholder dilution
Intrinsic Value (DCF)
A 10-year discounted cash flow, then the bridge from business value to value per share.
Reported cash flow → unlevered free cash flow
Free Cash Flow (reported)
$2.5B
+ After-Tax Interest Expense
$20.5M
= Unlevered Free Cash Flow
$2.5B
Business value (10-year DCF)
PV of Years 1–10
$16.3B
PV of Terminal Value
$13.1B
= Business Value
$29.4B
Terminal value share
44.49%
Business value → share value
Intrinsic Value (business)
$29.4B
+ Cash & Equivalents
$1.5B
− Debt
$568M
= Shareholders' Value
$30.3B
÷ Diluted Shares
477.0 million
= Fair Value / Share
$63.50
Divided by 477.0 million diluted shares — the weighted-average diluted count from the most recent quarterly income statement, for the quarter ended 2026-03-31.
Risk bucket → discount rate
mid (12%)
Year-1 FCF
$2.5B
Trailing twelve months.
FY2023 $2B · FY2024 $1.8B · FY2025 $2.6B
Growth rate (yrs 1–10)
4%
Terminal growth (after yr 10)
3%
AI Analysis
The valuation for Cognizant applies a 12% discount rate, reflecting a mid-risk classification that balances the company's position in stable IT services demand against the uncertainties posed by macroeconomic spending headwinds and the potential for long-term AI-driven disruption. The forecast uses a Year-1 unlevered free cash flow of $2.5B, a fixed input based on trailing-twelve-month data. For the ten-year growth forecast, a 4.00% rate is applied, which aligns with the company's mature, low single-digit historical cash flow patterns. Beyond the ten-year horizon, a 3% terminal growth rate is assumed; this is a fixed rate applied to all companies in this framework to represent steady long-term economic growth, rather than a specific business judgment. The fair value per share is calculated at $63.50, derived by determining the total intrinsic business value, adding $1.5B in cash and equivalents, subtracting $568M in debt, and dividing by 477.0 million shares. With a current price of $57.10, the upside to fair value is 11.22%. The margin of safety, which represents the buffer the estimate carries for potential forecasting errors, is 10.1%. This valuation is most sensitive to the assumed 4.00% growth rate; if the company's ability to maintain or expand its cash flow generation in the face of shifting technological landscapes deviates from this rate, the resulting fair value estimate would shift accordingly.
Overall Verdict
How the five signals above stack up together, then the full synthesis.
Earnings Yield
8.18% vs ~4-5% bond-yield benchmark
Return on Capital
88.94% ROC vs ~30% benchmark
Acquirer's Multiple
7.8x against a peer median of 9.3x (peers: 10.0x and 8.6x) — 16.1% below the median.
FS-Score
8/10 — Financial rockstar
Intrinsic Value
11.22% upside to fair value
This assessment balances operational efficiency against current pricing. The Return on Capital of 88.94% and an FS-Score of 8/10 measure how effectively Cognizant generates profit from its assets and maintains financial health, both landing in the favorable range relative to their benchmarks. On the pricing side, the Earnings Yield of 8.18% exceeds the bond-yield benchmark, and the Acquirer's Multiple of 7.8x sits 16.1% below the peer median, indicating a lower valuation relative to those comparables. The Intrinsic Value check registers a yellow signal with an 11.22% upside to fair value, which corresponds to a 10.1% margin of safety. While the business demonstrates strong operational metrics, the disagreement between these valuation measures—where some indicators suggest a lower price relative to peers while the intrinsic value model suggests only moderate upside—creates tension. A change in the FS-Score would have the most significant impact on the overall profile, as it acts as a primary indicator of the company's fundamental financial stability.
Comments
Notes from readers on CTSH — one each. Comments stay with the company, so they carry across to a later snapshot, and each one shows the date it was written.
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