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Is Cognizant (CTSH) Stock Undervalued Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Cognizant (CTSH - Free Report) . CTSH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 15.60, while its industry has an average P/E of 20.93. Over the past 52 weeks, CTSH's Forward P/E has been as high as 16.26 and as low as 12.23, with a median of 15.14.

Investors should also note that CTSH holds a PEG ratio of 1.55. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CTSH's industry currently sports an average PEG of 1.95. CTSH's PEG has been as high as 1.61 and as low as 1.03, with a median of 1.46, all within the past year.

Investors should also recognize that CTSH has a P/B ratio of 3.42. 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 solid versus its industry's average P/B of 10.07. CTSH's P/B has been as high as 4.23 and as low as 2.91, with a median of 3.54, over the past year.

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 2.18. This compares to its industry's average P/S of 2.61.

Finally, our model also underscores that CTSH has a P/CF ratio of 14.18. 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. This stock's P/CF looks attractive against its industry's average P/CF of 52.05. Over the past 52 weeks, CTSH's P/CF has been as high as 23.58 and as low as 12.90, with a median of 15.89.

Value investors will likely look at more than just these metrics, but the above data helps show that Cognizant is likely undervalued currently. And when considering the strength of its earnings outlook, CTSH sticks out at as one of the market's strongest value stocks.


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