CTSH
Cognizant
Dividend / Cash flow
★ Quality 21/100Price today
$43.78
what the market pays
Worth
$32.28
calculated cycle value
Price is 36% above its value
charlieapp.co
Price vs Intrinsic Value
The line is the price month by month; the green band marks when it's undervalued (−20% off value). When the price drops in there, the discount is real, not opinion.
Where does the value come from?
Established business paying dividends
$29.50
per share
How it's calculated
Cognizant — high assistant path (2026-06-06). Review note.
Net cash in the bank
cash minus financial debt, per share
Total calculated value
business + cash
How many times the cash flow
Dividend / Cash flow · vs 42 peers
You pay 7.7x times this business's cash flow; its sector median is 25.8x.
27% above what Charlie thinks it's worth (5.6x) — you're overpaying, sector or no sector.
Why Overvalued?
Its free cash flow is $5.31/share × 5.6x multiplier plus $2.78 in net cash = $32.28 in intrinsic value. Today's price of $43.78 is 26% above the calculated value — the market is paying a premium over what the model sees as fair.
The price is 36% above the calculated value. You're paying more than it's worth.
Buying here lowers your expected return and wipes out the safety margin.
The next reasonable entry zone starts at $30.67.
At what price would buying make sense?
Entry zones
🟢 Undervalued
≤$25.82
-20% off Value
🟡 Discounted
≤$30.67
-5% off Value
🔴 Today
$43.78
-26% Valor
Overvalued
The market prices it too high versus what the business makes. Patience pays off here.
“Time is the friend of the wonderful company, the enemy of the mediocre.”
— Warren Buffett
Model updated · July 2026
The business
An army of Indian engineers rented by the hour; the cheap guy always finds a rival.
Cognizant sells IT services and consulting: systems modernization, business process management, and outsourcing for banking, healthcare, and retail. It charges per project and via multi-year managed-service contracts, billing $21.1B in 2025. The 34% gross margin gives away the business: labor-intensive, mostly in India.
Its edge is switching costs and long relationships with clients who've already woven Cognizant into their critical operations. But there's no real moat: it goes head-to-head with Accenture, Infosys, and TCS, all with the same labor-arbitrage model. When your edge is being cheap, someone can always be cheaper.
Revenue history
From $18.5B to $21.1B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $21.1B · FY2025
Of every $100 in sales, $89 goes to costs and operations; $11 is left as net profit (11% margin).
Catalysts and risks
Revenue grew to $21.1B in 2025, recovering growth after years stuck around ~$19.4B.
FCF of $2.6B on $2.2B of net income: it turns profit into real cash, backing the dividend.
Clean balance sheet — $1.9B cash against $0.5B debt — leaves room for buybacks and bolt-on acquisitions.
Generative AI directly threatens the billable-hours model: it automates exactly what Cognizant sells.
Structural growth of 3%: it's a mature business competing on price, not differentiation.
Dependence on banking and healthcare — an IT spending cut from those clients hits revenue immediately.
Charlie's note
“A decent business at a sensible price, not a gem. AI could eat the hours model or multiply its productivity — nobody knows yet. At 5.56x FCF you get paid to wait; just make sure you don't confuse cheap with good.”
Analysis · June 2026
So when would be a good price for Cognizant?
By our calculation, not yet. We will email you the day it drops to $30.67 — so you do not have to keep checking.
🔔 Email meFree · no card
Charlie informs, it doesn't advise. No information should be taken as a recommendation to buy or sell.