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Cognizant Technology Solutions Corporation - (CTSH) Company Bio

Cognizant Technology Solutions is a provider of information technology, consulting, and business process outsourcing services. The Company operates in four segments: Financial Services segment, which include banking and insurance; Healthcare segment, which includes healthcare and life sciences, and Manufacturing/Retail/Logistics segment, which includes manufacturing and logistics; retail, travel and hospitality, and consumer goods and Other segment, which includes Communications, Manufacturing/Retail/Logistics, and High Technology.

CTSH Price Forecast Based on DCF Valuation

We started the process of determining a valid price forecast for Cognizant Technology Solutions Corp with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Cognizant Technology Solutions Corp ranked in the 38st percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 48%. The most interesting components of our discounted cash flow analysis for Cognizant Technology Solutions Corp ended up being:

• The company's debt burden, as measured by earnings divided by interest payments, is 98.57; that's higher than 92.26% of US stocks in the Technology sector that have positive free cash flow.
• The business' balance sheet reveals debt to be 4% of the company's capital (with equity being the remaining amount). Approximately merely 14.96% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
• CTSH's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than 54.33% of tickers in our DCF set.

EXLS, ROG, APH, FTV, and MIXT can be thought of as valuation peers to CTSH, in the sense that they are in the Technology sector and have a similar price forecast based on DCF valuation.