Definitive Analysis
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Cognizant Technology Solutions Corporation (0QZ5.L)

Company Dividend Discount ModelIndustry: Software - ServicesSector: Technology

Valuation Snapshot

Stable Growth$44.85 - $71.10$56.82
Multi-Stage$57.61 - $63.12$60.32
Blended Fair Value$58.57
Current Price$67.07
Upside-12.68%
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 Rate9.10%9.10%9.10%
Growth Rate1.29%2.29%3.29%
Fair Value$44.85$56.82$71.10
Upside / Downside-33.13%-15.29%6.01%

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 Rate9.10%9.10%9.10%
Growth Rate1.29%2.29%3.29%
Year 1 PV (M)808.00815.97823.95
Year 2 PV (M)975.41994.761,014.31
Year 3 PV (M)1,114.741,148.081,182.08
Year 4 PV (M)1,229.151,278.411,329.14
Year 5 PV (M)1,321.491,388.021,457.20
PV of Terminal Value (M)22,940.9924,095.9625,296.98
Equity Value (M)28,389.7729,721.2031,103.66
Shares Outstanding (M)492.75492.75492.75
Fair Value$57.61$60.32$63.12
Upside / Downside-14.10%-10.07%-5.89%

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