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華爾街日報Can Cognizant Still Offer Value After Recent 3.3% Weekly and 59.6% Three Year Gains?
- If you have been wondering whether Cognizant Technology Solutions is still worth buying at around $83.63, you are not alone; this stock has quietly become a classic "is it still good value" candidate.
- The share price has climbed 3.3% over the last week, 15.2% in the past month, and 9.4% year to date, while longer term holders have seen gains of 59.6% over three years and 11.5% over five years.
- Recently, investors have been reacting to a steady drumbeat of strategy updates, major client wins, and ongoing shifts in the broader IT services and digital transformation landscape. These developments have helped reshape expectations around Cognizant's growth profile and competitive positioning, which in turn feeds directly into how the market is revaluing the stock.
- On our valuation framework, Cognizant earns a 5/6 value score, suggesting it looks undervalued on most of the key checks we run. In the next sections we will unpack the different valuation methods behind that number as well as a more powerful way to think about the stock's true worth.
Approach 1: Cognizant Technology Solutions Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow (DCF) model estimates what a business is worth today by projecting the cash it will generate in the future and then discounting those cash flows back to the present.
For Cognizant Technology Solutions, the model starts with last twelve months free cash flow of about $2.63 billion and applies a two stage Free Cash Flow to Equity approach. Analysts provide explicit forecasts out to 2028, where free cash flow is expected to reach roughly $3.31 billion. Beyond that, Simply Wall St extrapolates cash flows through 2035, with projected figures rising above $4.8 billion, but increasingly moderated as growth tapers over time.
When all of these projected cash flows are discounted back to today, the DCF model arrives at an intrinsic value of about $125.08 per share. Compared with the recent share price around $83.63, the model implies the stock is trading at a 33.1% discount to its estimated fair value. This indicates potential upside if these cash flow assumptions play out.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Cognizant Technology Solutions is undervalued by 33.1%. Track this in your watchlist or portfolio, or discover 915 more undervalued stocks based on cash flows.
Approach 2: Cognizant Technology Solutions Price vs Earnings
For profitable, relatively mature businesses like Cognizant, the price to earnings, or PE, ratio is a practical way to gauge value because it links what investors pay directly to the company’s current earnings power. In general, faster growing and lower risk companies tend to trade on a higher PE, while slower growing or riskier names tend to trade on lower multiples.
Cognizant currently trades on a PE of about 19x, which sits below both the IT industry average of roughly 29.3x and the peer average of around 25.1x. Those comparisons hint at potential value, but they do not fully account for Cognizant’s specific growth outlook, margins and risk profile.
That is where Simply Wall St’s Fair Ratio comes in. This proprietary metric estimates what PE a company might trade on given its earnings growth, industry, profitability, market cap and risk characteristics. For Cognizant, the Fair Ratio is calculated at about 33.8x, compared with the current 19x, which suggests the market is applying a discount that appears larger than fundamentals alone would justify.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Cognizant Technology Solutions Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply the stories investors tell about a company, expressed through their assumptions for future revenue, earnings, margins and ultimately fair value.
On Simply Wall St’s Community page, Narratives make this easy and accessible by linking the company’s story to a structured financial forecast and then to a fair value estimate, so you can clearly see how your view translates into numbers.
Because each Narrative compares its Fair Value to today’s share price, it can quickly show whether, under that story, Cognizant appears to be attractively priced, fairly valued or expensive, and it updates dynamically as new information like earnings results, major AI deal wins or policy headlines arrive.
For Cognizant, one investor might build a bullish Narrative around accelerating AI adoption and buybacks that supports a Fair Value closer to the high analyst target of about $103. Another might focus on regulatory and competitive risks and land nearer the low end around $75. Narratives help you see exactly which assumptions lead you to either conclusion.
Do you think there's more to the story for Cognizant Technology Solutions? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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