Cognizant (NASDAQ: CTSH) and Virtusa (NASDAQ:VRTU) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, valuation, profitability, risk, analyst recommendations and institutional ownership.
This table compares Cognizant and Virtusa’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider & Institutional Ownership
88.7% of Cognizant shares are held by institutional investors. Comparatively, 86.3% of Virtusa shares are held by institutional investors. 0.6% of Cognizant shares are held by insiders. Comparatively, 6.0% of Virtusa shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Cognizant pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. Virtusa does not pay a dividend. Cognizant pays out 22.7% of its earnings in the form of a dividend.
Earnings & Valuation
This table compares Cognizant and Virtusa’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Cognizant||$14.81 billion||3.00||$1.50 billion||$3.53||21.47|
|Virtusa||$1.02 billion||1.37||$11.85 million||$0.89||53.22|
Cognizant has higher revenue and earnings than Virtusa. Cognizant is trading at a lower price-to-earnings ratio than Virtusa, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and price targets for Cognizant and Virtusa, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Cognizant currently has a consensus price target of $84.19, suggesting a potential upside of 11.09%. Virtusa has a consensus price target of $58.71, suggesting a potential upside of 23.95%. Given Virtusa’s higher probable upside, analysts clearly believe Virtusa is more favorable than Cognizant.
Volatility and Risk
Cognizant has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500. Comparatively, Virtusa has a beta of 1.29, indicating that its stock price is 29% more volatile than the S&P 500.
Cognizant beats Virtusa on 11 of the 16 factors compared between the two stocks.
Cognizant Technology Solutions Corporation, a professional services company, provides consulting and technology, and outsourcing services worldwide. The company operates through four segments: Financial Services; Healthcare; Products and Resources; and Communications, Media and Technology. It offers business, process, operations, and technology consulting services; application design and development, and systems integration services; application testing, consulting, and engineering services; and enterprise information management services. The company also develops, licenses, implements, and supports various software products for the healthcare industry, including solutions for health insurance plans, third party benefit administrators, and healthcare providers. In addition, it provides application maintenance services; information technology infrastructure services, such as data center, infrastructure security, network and convergence, end-user computing, and mobility services; and business process services comprising clinical data management, pharmacovigilance, equity research support, commercial operations, and order management services, as well as consulting and platform-based services. The company markets and sells its services directly through its professional staff, senior management, and direct sales personnel. It serves banking and insurance, healthcare and life sciences, manufacturing and logistics, retail and consumer goods, travel and hospitality, energy and utilities, communications and media, and technology industries. The company was founded in 1994 and is headquartered in Teaneck, New Jersey.
Virtusa Corporation operates as an information technology (IT) services company. It offers business and IT consulting services comprising advisory/target operating model, business process re-engineering/BPM, transformational solution consulting, and business/technology alignment analysis; omni-channel digital strategy, experience design ASD, and employee engagement; and application portfolio rationalization, SDLC transformation, and BA competency transformation services. The company also provides technology implementation services, such as application development, software product engineering, CRM and SAP implementation, content management, enterprise mobility, cloud computing, and social media solutions; systems consolidation and rationalization, technology migration and porting, and legacy application Web-enablement; data management, business intelligence, reporting and decision support, master data management, data integration, and big data analytics; and software quality assurance and managed testing services. In addition, it offers application outsourcing services, such as the application maintenance and support, maintenance and enhancement of applications, and cloud-environment management and support; managed infrastructure services, and remote application monitoring and support; and IT efficiency improvement services. Further, the company offers digital transformation and innovation; operational excellence; and transformational solutions. Virtusa Corporation provides its services to communications and technology; banking, financial services, and insurance; and media and information industries worldwide. The company was formerly known as eRunway, Inc. and changed its name to Virtusa Corporation in April 2002. Virtusa Corporation was founded in 1996 and is headquartered in Westborough, Massachusetts.
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