Yahoo Finance Should You Think About Buying Cognizant Technology Solutions Corporation (NASDAQ:CTSH) Now?
Today we're going to take a look at the well-established Cognizant Technology Solutions Corporation (NASDAQ:CTSH). The company's stock received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$79.82 at one point, and dropping to the lows of US$70.12. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Cognizant Technology Solutions' current trading price of US$77.09 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Cognizant Technology Solutions’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Cognizant Technology Solutions
What's The Opportunity In Cognizant Technology Solutions?
According to our valuation model, Cognizant Technology Solutions seems to be fairly priced at around 4.8% below our intrinsic value, which means if you buy Cognizant Technology Solutions today, you’d be paying a fair price for it. And if you believe the company’s true value is $81.00, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Cognizant Technology Solutions’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of Cognizant Technology Solutions look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Cognizant Technology Solutions' earnings over the next few years are expected to increase by 28%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in CTSH’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on CTSH, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you want to dive deeper into Cognizant Technology Solutions, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Cognizant Technology Solutions.
If you are no longer interested in Cognizant Technology Solutions, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
