Cognizant Technology Solutions CorpCTSH · Nasdaq

Why the market may be pricing it low

• Clients increasingly build their own in-house global capability centers as a cheaper alternative, threatening Cognizant's core outsourcing market.

  we face competition from clients' in-house technology resources, such as GCCs, which may provide a lower cost alternative to our servicesBusiness

• Clients themselves face disruption from nimble AI-native competitors, casting doubt on demand for Cognizant's traditional large-scale outsourcing model.

  Across industries, our clients are confronted with the risk of being disrupted by nimble, AI-native competitorsRisk factors

What could close the gap

• A February 2026 executive change (Item 5.02) disclosure could lead to a strategic or capital-allocation shift under new leadership.

  2026-02-26 Item 5.028-K filings

• A May 2026 disclosure of a new debt obligation (Item 2.03) could point to a financing or capital-policy shift, such as stronger shareholder returns.

  2026-05-21 Item 2.038-K filings

How a buyer could still lose (value trap)

• Despite a high Piotroski F-score of 8/9, the one unmet criterion is year-over-year ROA improvement, suggesting profitability gains may be stalling.

  Based on the figures below

• Cash of $1,517M against debt of $606M looks solid, but if client insourcing via GCCs persists, ample liquidity may not translate into renewed growth.

  Based on the figures below

Financial quality (Piotroski F-score)

• ✓Profitable (ROA > 0)
• ✓Positive operating cash flow
• ✗ROA up on last year
• ✓Cash flow exceeds net profit
• ✓Leverage down on last year
• ✓Current ratio up on last year
• ✓No new shares issued
• –Gross margin up on last yearno data
• ✓Asset turnover up on last year

Scored out of the checks with data, scaled to 9. Compares the latest year with the year before.

Figures

Sales

$21.4bn

Operating profit

$3.4bn

Net profit

$2.2bn

Operating cash flow

$2.8bn

Cash

$1.5bn

Debt

$606m

Equity

$15.1bn

Latest twelve months to 2026-03-31; F-score for the fiscal year to 2025-12-31