Tech Mahindra vs Cognizant Technology Solutions Which Performs Better?

Tech Mahindra and Cognizant Technology Solutions are two leading companies in the global IT services industry. Both companies have a strong presence in the market and have shown consistent growth over the years. However, there are key differences between the two companies, such as their business models, revenue streams, and market focus. Investors looking to invest in the IT services industry should consider these factors when evaluating the stocks of Tech Mahindra and Cognizant Technology Solutions.

Tech Mahindra or Cognizant Technology Solutions?

When comparing Tech Mahindra and Cognizant Technology Solutions, 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 Tech Mahindra and Cognizant Technology Solutions.

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. Tech Mahindra has a dividend yield of 2.4%, while Cognizant Technology Solutions has a dividend yield of 1.49%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Tech Mahindra reports a 5-year dividend growth of 25.74% year and a payout ratio of 0.00%. On the other hand, Cognizant Technology Solutions reports a 5-year dividend growth of 3.01% year and a payout ratio of 26.47%.

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 Tech Mahindra P/E ratio at 48.41 and Cognizant Technology Solutions's P/E ratio at 17.70. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Tech Mahindra P/B ratio is 5.99 while Cognizant Technology Solutions's P/B ratio is 2.76.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Tech Mahindra has seen a 5-year revenue growth of 0.50%, while Cognizant Technology Solutions's is 0.38%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Tech Mahindra's ROE at 12.22% and Cognizant Technology Solutions's ROE at 16.36%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ₹1761.05 for Tech Mahindra and $80.33 for Cognizant Technology Solutions. Over the past year, Tech Mahindra's prices ranged from ₹1162.95 to ₹1807.70, with a yearly change of 55.44%. Cognizant Technology Solutions's prices fluctuated between $63.79 and $82.41, with a yearly change of 29.19%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.