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In this updated coverage research report, we reexamine the information technology sector company Cognizant Technology Solutions Corporation CTSH 0.00%↑ to determine if it continues to meet QualityValue Investing’s (QVI) Real-Time Stock Picks criteria based on our proprietary checklist analysis of the business’s current wealth and the share price’s present value.
Cognizant Technology Solutions | Current Wealth
Value Proposition
Company Profile
Cognizant Technology Solutions is a dividend-paying mid-cap stock in the information technology sector’s IT services industry. It was added to the QVI Real-Time Stock Picks on November 29, 2022, at a $57.47 cost basis per share, adjusted for dividends paid in cash.
Cognizant Technology Solutions Corporation is a professional services firm that offers consulting, technology, and outsourcing services across North America, Europe, and worldwide. It operates through four segments: Financial Services, Health Sciences, Products and Resources, and Communications, Media, and Technology. The company was founded in 1988 and is based in Teaneck, New Jersey, USA.
Economic Moat
Morningstar gives Cognizant Technology Solutions a narrow moat rating because of its intangible assets and customer switching costs tied to its tech services, which are familiar moat sources in the IT services industry.
QVI’s Value Proposition Elevator Pitch for CTSH
Cognizant Technology Solutions is a professional services firm that has established a timely, profitable, and enduring business model by assisting clients across a wide range of global healthcare, financial services, media, and internet industries in their transition to AI- and data-driven operations in the digital era.
QVI’s value proposition rating for Cognizant Technology Solutions: Bullish.
Returns on Management
Revenue Growth and Net Profit Margin
According to the table below, Cognizant Technology Solutions’ trailing five-year annualized revenue growth was single-digit positive but lagged behind the S&P 500’s top-line growth of 15.6%. Furthermore, the company’s revenue growth of +6.3% underperformed the broader market’s 17.8% increase for the most recent twelve months.
Further down the income statement, Cognizant posted a positive double-digit net profit margin from a low gross margin, underperforming the S&P 500’s net profit of 22.7% from a gross margin of 54.7%.
Returns on Equity and Invested Capital
Cognizant’s senior management achieved a return on equity (ROE) that matched QVI’s target threshold but lagged behind the S&P 500’s ROE of 47.7%.
Stock buyback programs often boost ROE. Cognizant's board approved a $2 billion increase to its share repurchase program in March 2025, raising the total authorization to $3.1 billion, and now expects to buy back $1.1 billion in shares in 2025, up $500 million from the previous forecast. This move demonstrates the company's confidence in its strategy and prospects.
Cognizant’s return on invested capital, or ROIC, met QVI’s threshold but fell short of the broader market’s 24.7% return. Additionally, the company’s ROIC exceeded its weighted average cost of capital, or WACC, showing that its senior executives are effective capital allocators.
Owners’ Earnings
In a further test of management effectiveness, the five-year trailing current wealth of owners’ earnings for Cognizant Technology Solutions, or EPS growth plus dividend rate growth annualized, was in the mid-teens, a sufficient rate of return for shareholders from a mid-cap technology services company. Notably, the one-year EPS growth was +12.2%.
QVI’s business fundamentals rating for Cognizant Technology Solutions: Bullish.
Next, we’ll analyze the company’s enterprise downside risks, the stock’s present value, including shareholder yields and share price downside risks, ending with an actionable investment thesis, all exclusive to Quality Value Investing’s premium (paying) subscribers.
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Data Sources: Unless noted, all data presented is sourced from Charles Schwab & Co., Cognizant Technology Solutions, Google Finance, GuruFocus, and Yahoo Finance as of the market close on September 22, 2025, and is for illustration purposes only.
Disclosure: As of the date of this research report, I/we do not hold any beneficial positions in CTSH common shares within our family portfolio. I authored this report myself, and it expresses my own opinions. I am not receiving any compensation for it beyond paid subscriptions on Substack. I have no business relationship with any companies mentioned in this post.
Additional Disclosure:David J. Waldron’s primary ticker research reports on Quality Value Investing are for informational purposes only. The accuracy of the data cannot be guaranteed. The narrative and analytics are impersonal, meaning they are not tailored to individual needs nor intended for portfolio construction beyond the QVI Real-Time Stock Picks, which is presented solely for educational purposes. David is an individual investor and author, not an investment adviser. Readers should always conduct independent research or due diligence and, as appropriate, consider consulting a fee-only certified financial planner, a licensed discount broker/dealer, a flat-fee registered investment adviser, a certified public accountant, or a specialized attorney before making any investment, income tax, or estate planning decisions.
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