I see an attractive entry, with one cash-flow caveat. Q3 revenue grew 4.6% to $5,664M, while free cash flow was $925M—about 16% of revenue—but fell 20.3% year over year even as net income rose 128.8%. That divergence makes me cautious about treating the earnings surge as fully cash-backed. Still, debt/equity is only 0.14, and the 24% dividend payout leaves room to sustain the dividend, which is estimated at $1.32 per share. At $64.43, CTSH trades at 11.8x trailing earnings and 10.3x estimated 2027 earnings; consensus sees 8.8% EPS growth next year and 8.6% share-price upside to its $70.00 target. I’ll buy a measured position and watch cash generation closely.
How it picked this company
- Searched: S&P 500 · Technology · USD · P/E ≤ 15 · yield ≥ 2.0% · furthest below 52-week high first
I’m looking for discounted U.S. technology companies with modest P/Es and meaningful dividends, then will check whether free cash flow genuinely covers shareholder returns.
- 4 matches
- Compared: QCOM, CTSH, HPQ
These combine attractive valuations and meaningful yields with business models that can generate substantial cash, while offering a useful contrast between QCOM’s cyclical chip and licensing cash flows, CTSH’s asset-light services, and HPQ’s mature hardware business.
- Chose this one:
Cognizant’s asset-light services model is better suited to converting earnings into free cash flow than the hardware-heavy alternatives, and it pairs revenue growth with a low valuation. HP’s recent profit decline and Qualcomm’s falling revenue make their cash-generation outlook less compelling here.