Cognizant Technology Solutions vs Infosys Which Outperforms?

Cognizant Technology Solutions and Infosys are two major players in the IT services industry, providing solutions to a wide range of clients globally. Both companies have experienced growth in recent years, but have faced challenges in the highly competitive market. Investors looking to capitalize on the potential of the IT services sector may consider analyzing the performance of these two stocks. By comparing key financial metrics, market trends, and growth prospects, investors can make informed decisions on whether to invest in Cognizant Technology Solutions or Infosys.

Cognizant Technology Solutions or Infosys?

When comparing Cognizant Technology Solutions and Infosys, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Cognizant Technology Solutions and Infosys.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Cognizant Technology Solutions has a dividend yield of 1.5%, while Infosys has a dividend yield of 2.5%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Cognizant Technology Solutions reports a 5-year dividend growth of 3.01% year and a payout ratio of 26.47%. On the other hand, Infosys reports a 5-year dividend growth of -5.23% year and a payout ratio of 70.72%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Cognizant Technology Solutions P/E ratio at 17.63 and Infosys's P/E ratio at 29.61. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Cognizant Technology Solutions P/B ratio is 2.75 while Infosys's P/B ratio is 8.87.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Cognizant Technology Solutions has seen a 5-year revenue growth of 0.38%, while Infosys's is 0.65%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Cognizant Technology Solutions's ROE at 16.36% and Infosys's ROE at 31.58%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $79.49 for Cognizant Technology Solutions and $23.29 for Infosys. Over the past year, Cognizant Technology Solutions's prices ranged from $63.79 to $82.41, with a yearly change of 29.19%. Infosys's prices fluctuated between $16.04 and $23.63, with a yearly change of 47.32%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.