CTSH

Cognizant Technology Solutions Corp

TMT


Presented:05/16/2018
Price:$75.39
Cap:$44.40B
Current Price:$77.38
Cap:$38.35B

Presented

Date05/16/2018
Price$75.39
Market Cap$44.40B
Ent Value$43.20B
P/E Ratio30.28x
Book Value$18.75
Div Yield1.06%
Shares O/S589.00M
Ave Daily Vol3,468,017
Short Int1.74%

Current

Price$77.38
Market Cap$38.35B
Cognizant Technology Solutions Corp. engages in the provision of information technology, consulting, and business process outsourcing services. It operates through the following segments: Financial Services, Healthcare, Manufacturing, Retail and Logistics, and Other. The Financial Services segment involves in customers providing banking/transaction processing, capital markets, and insurance services. The Healthcare segment offers healthcare providers and payers as well as life sciences customers. The Manufacturing, Retail and Logistics segment comprises of manufacturers, retailers, and customers providing logistics services. The Other segment includes communications, information, media and entertainment, and high technology. The company was founded by Wijeyaraj Kumar Mahadeva and Francisco D'Souza in 1994 and is headquartered in Teaneck, NJ.

Publicly traded companies mentioned herein: Accenture PLC (ACN), Cognizant Technology Solutions Corp (CTSH), Infosys Ltd (INFY),

Highlights

There is presently a healthy, important debate about the future of IT/professional services companies such as Cognizant, Infosys, and Accenture, among others, that provide consulting and other related services to C-suites around the globe. Can these businesses grow and sustain margins? Or, is this type of business a commodity, susceptible to further price pressure and margin erosion? The presenter is long Cognizant (CTSH) at $75 due to his belief that it can grow the top line high single digits (%), and margins can improve by at least 30bps per year over the next 2 - 3 years. He sees the selloff following Q1 earnings as a buying opportunity, as his model forecasts $6 of EPS for 2019 (up from $3.77 at the end of 2017, and ~$1 ahead of the consensus estimate). At just 12.5x his earnings estimate today the shares are attractively valued. Applying a 17x - 18x multiple in one year’s time equates to a $102 - $108 price target range in 12 - 18 months.

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Idea Discussion

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