CTSH
Cognizant Technology Solutions Corporation
$44.77
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 36.2% below fair value
You pay
$44.77
Bear
$56.17
Fair
$70.21
Bull
$84.25
Bear
$56.17
+25.5%
$4.73 × 12x P/E
Fair
$70.21
+56.8%
$4.73 × 15x P/E
Bull
$84.25
+88.2%
$4.73 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
9.5x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $68.85 from 51 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $70.21 per share.
Warnings
Dividend-based valuation: $39.93 (below our primary estimate by 44%). Large gaps may signal the dividend doesn't reflect full earning power.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples