Definitive Analysis
Definitive Analysis

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Cognizant Technology Solutions Corporation (0QZ5.L)

Company Dividend Discount ModelIndustry: Software - ServicesSector: Technology

Valuation Snapshot

Stable Growth$54.03 - $92.15$70.57
Multi-Stage$74.74 - $82.00$78.30
Blended Fair Value$74.44
Current Price$67.07
Upside10.98%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS5.78%0.00%1.221.201.141.030.970.920.950.540.000.00
YoY Growth--1.52%4.79%10.81%6.04%5.96%-3.21%76.60%0.00%0.00%0.00%
Dividend Yield--1.59%1.67%1.88%1.15%1.25%1.98%1.29%0.67%0.00%0.00%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)2,128.00
(-) Cash Dividends Paid (M)609.00
(=) Cash Retained (M)1,519.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)425.60266.00159.60
Cash Retained (M)1,519.001,519.001,519.00
(-) Cash Required (M)-425.60-266.00-159.60
(=) Excess Retained (M)1,093.401,253.001,359.40
(/) Shares Outstanding (M)492.75492.75492.75
(=) Excess Retained per Share2.222.542.76
LTM Dividend per Share1.241.241.24
(+) Excess Retained per Share2.222.542.76
(=) Adjusted Dividend3.453.783.99
WACC / Discount Rate7.77%7.77%7.77%
Growth Rate1.29%2.29%3.29%
Fair Value$54.03$70.57$92.15
Upside / Downside-19.45%5.22%37.40%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)2,128.002,176.832,226.782,277.882,330.152,383.622,455.13
Payout Ratio28.62%40.89%53.17%65.45%77.72%90.00%92.50%
Projected Dividends (M)609.00890.211,184.001,490.811,811.082,145.262,270.99

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate7.77%7.77%7.77%
Growth Rate1.29%2.29%3.29%
Year 1 PV (M)817.93826.01834.08
Year 2 PV (M)999.551,019.381,039.41
Year 3 PV (M)1,156.381,190.971,226.24
Year 4 PV (M)1,290.751,342.481,395.75
Year 5 PV (M)1,404.791,475.511,549.05
PV of Terminal Value (M)31,161.0432,729.8534,361.22
Equity Value (M)36,830.4438,584.2040,405.76
Shares Outstanding (M)492.75492.75492.75
Fair Value$74.74$78.30$82.00
Upside / Downside11.44%16.75%22.26%

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