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Are Investors Undervaluing Cognizant (CTSH) Right Now?
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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Cognizant (CTSH - Free Report) . CTSH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 16.03, which compares to its industry's average of 20.72. Over the past 52 weeks, CTSH's Forward P/E has been as high as 16.99 and as low as 12.23, with a median of 15.33.
Investors will also notice that CTSH has a PEG ratio of 1.59. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CTSH's industry currently sports an average PEG of 1.93. Over the last 12 months, CTSH's PEG has been as high as 1.61 and as low as 1.03, with a median of 1.28.
Another valuation metric that we should highlight is CTSH's P/B ratio of 3.39. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 9.82. Over the past 12 months, CTSH's P/B has been as high as 4.47 and as low as 2.91, with a median of 3.63.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CTSH has a P/S ratio of 2.15. This compares to its industry's average P/S of 2.85.
Finally, our model also underscores that CTSH has a P/CF ratio of 15.06. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. CTSH's P/CF compares to its industry's average P/CF of 51.86. Within the past 12 months, CTSH's P/CF has been as high as 24.94 and as low as 12.90, with a median of 16.36.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Cognizant is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CTSH feels like a great value stock at the moment.
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Are Investors Undervaluing Cognizant (CTSH) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Cognizant (CTSH - Free Report) . CTSH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 16.03, which compares to its industry's average of 20.72. Over the past 52 weeks, CTSH's Forward P/E has been as high as 16.99 and as low as 12.23, with a median of 15.33.
Investors will also notice that CTSH has a PEG ratio of 1.59. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CTSH's industry currently sports an average PEG of 1.93. Over the last 12 months, CTSH's PEG has been as high as 1.61 and as low as 1.03, with a median of 1.28.
Another valuation metric that we should highlight is CTSH's P/B ratio of 3.39. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 9.82. Over the past 12 months, CTSH's P/B has been as high as 4.47 and as low as 2.91, with a median of 3.63.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CTSH has a P/S ratio of 2.15. This compares to its industry's average P/S of 2.85.
Finally, our model also underscores that CTSH has a P/CF ratio of 15.06. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. CTSH's P/CF compares to its industry's average P/CF of 51.86. Within the past 12 months, CTSH's P/CF has been as high as 24.94 and as low as 12.90, with a median of 16.36.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Cognizant is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CTSH feels like a great value stock at the moment.