As of June 12, 2025, Cognizant Technology Solutions Corp's estimated intrinsic value ranges from $68.76 to $85.42 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $85.42 | +5.9% |
| Discounted Cash Flow (5Y) | $83.84 | +3.9% |
| Dividend Discount Model (Multi-Stage) | $68.76 | -14.7% |
| Dividend Discount Model (Stable) | $79.12 | -1.9% |
| Earnings Power Value | $81.30 | +0.8% |
Is Cognizant Technology Solutions Corp (CTSH) undervalued or overvalued?
With the current market price at $80.65, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Cognizant Technology Solutions Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.63 | 0.67 |
| Cost of equity | 6.8% | 8.6% |
| Cost of debt | 4.3% | 4.5% |
| Tax rate | 24.2% | 24.4% |
| Debt/Equity ratio | 0.02 | 0.02 |
| After-tax WACC | 6.7% | 8.5% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $84 | $39,946M | 76.9% |
| 10-Year Growth | $85 | $40,725M | 58.4% |
| 5-Year EBITDA | $77 | $36,672M | 74.9% |
| 10-Year EBITDA | $82 | $38,828M | 56.4% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $2,894M |
| Discount Rate (WACC) | 8.5% - 6.7% |
| Enterprise Value | $34,127M - $43,262M |
| Net Debt | $(1,380)M |
| Equity Value | $35,507M - $44,642M |
| Outstanding Shares | 493M |
| Fair Value | $72 - $91 |
| Selected Fair Value | $81.30 |
| Metric | Value |
|---|---|
| Market Capitalization | $39756M |
| Enterprise Value | $38376M |
| Trailing P/E | 16.87 |
| Forward P/E | 16.63 |
| Trailing EV/EBITDA | 10.45 |
| Current Dividend Yield | 152.63% |
| Dividend Growth Rate (5Y) | 5.74% |
| Debt-to-Equity Ratio | 0.02 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $25.62 |
| Discounted Cash Flow (5Y) | 25% | $20.96 |
| Dividend Discount Model (Multi-Stage) | 20% | $13.75 |
| Dividend Discount Model (Stable) | 15% | $11.87 |
| Earnings Power Value | 10% | $8.13 |
| Weighted Average | 100% | $80.33 |
Based on our comprehensive valuation analysis, Cognizant Technology Solutions Corp's weighted average intrinsic value is $80.33, which is approximately 0.4% below the current market price of $80.65.
Key investment considerations:
Given these factors, we believe Cognizant Technology Solutions Corp is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.