Comparing Cognizant Technology Solutions (NASDAQ:CTSH) and Accenture (NYSE:ACN)

Accenture (NYSE:ACN – Get Free Report) and Cognizant Technology Solutions (NASDAQ:CTSH – Get Free Report) are both large-cap computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their risk, profitability, earnings, institutional ownership, analyst recommendations, valuation and dividends.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Accenture and Cognizant Technology Solutions, as reported by MarketBeat.

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Accenture currently has a consensus target price of $274.50, indicating a potential upside of 46.54%. Cognizant Technology Solutions has a consensus target price of $73.00, indicating a potential upside of 30.92%. Given Accenture’s stronger consensus rating and higher possible upside, analysts plainly believe Accenture is more favorable than Cognizant Technology Solutions.

Dividends

Accenture pays an annual dividend of $6.52 per share and has a dividend yield of 3.5%. Cognizant Technology Solutions pays an annual dividend of $1.32 per share and has a dividend yield of 2.4%. Accenture pays out 53.4% of its earnings in the form of a dividend. Cognizant Technology Solutions pays out 28.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Accenture has increased its dividend for 20 consecutive years and Cognizant Technology Solutions has increased its dividend for 6 consecutive years. Accenture is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

75.1% of Accenture shares are owned by institutional investors. Comparatively, 92.4% of Cognizant Technology Solutions shares are owned by institutional investors. 0.0% of Accenture shares are owned by insiders. Comparatively, 0.4% of Cognizant Technology Solutions shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Accenture and Cognizant Technology Solutions’ net margins, return on equity and return on assets.

Volatility & Risk

Accenture has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500. Comparatively, Cognizant Technology Solutions has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Earnings & Valuation

This table compares Accenture and Cognizant Technology Solutions”s revenue, earnings per share and valuation.

Accenture has higher revenue and earnings than Cognizant Technology Solutions. Cognizant Technology Solutions is trading at a lower price-to-earnings ratio than Accenture, indicating that it is currently the more affordable of the two stocks.

Summary

Accenture beats Cognizant Technology Solutions on 13 of the 16 factors compared between the two stocks.

About Accenture

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Accenture plc, a professional services company, provides strategy and consulting, industry X, song, and technology and operation services worldwide. The company offers application services, including agile transformation, DevOps, application modernization, enterprise architecture, software and quality engineering, data management; intelligent automation comprising robotic process automation, natural language processing, and virtual agents; and application management services, as well as software engineering services; strategy and consulting services; data and analytics strategy, data discovery and augmentation, data management and beyond, data democratization, and industrialized solutions comprising turnkey analytics and artificial intelligence (AI) solutions; metaverse; and sustainability services. It also provides change management, HR transformation and delivery, organization strategy and design, talent strategy and development, and leadership and culture services; digital commerce; infrastructure services, including cloud infrastructure managed, cloud and data center, network, digital workplace, database platforms, service management, and cloud and infrastructure security services; data-enabled operating models; technology consulting and AI services; and technology consulting services. In addition, the company offers engineering and R&D digitization, smart connected products, product as-a-service enablement, capital projects, intelligent asset management, digital industrial workforce, and autonomous robotic systems; business process outsourcing; and services related to technology innovation. Further, it provides cloud, ecosystem, marketing, security, supply chain management, zero-based transformation, customer experience, finance consulting, mergers and acquisitions, and sustainability services. The company has a collaboration with Salesforce, Inc. to develop Salesforce Life Sciences Cloud. The company was founded in 1951 and is based in Dublin, Ireland.

About Cognizant Technology Solutions

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Cognizant Technology Solutions Corporation, a professional services company, provides consulting and technology, and outsourcing services in North America, Europe, and internationally. It operates through four segments: Financial Services, Health Sciences, Products and Resources, and Communications, Media and Technology. The company provides customer experience, robotic process automation, analytics, and AI services in areas, such as digital lending, fraud detection, and next generation payments; the shift towards consumerism, outcome-based contracting, digital health, delivering integrated seamless, omni-channel, and patient-centered experience; and services that drive operational improvements in areas, such as clinical development, pharmacovigilance, and manufacturing, as well as claims processing, enrollment, membership, and billing to healthcare providers and payers, and life sciences companies, including pharmaceutical, biotech, and medical device companies. It offers solution to manufacturers, automakers, retailers and travel and hospitality companies, as well as companies providing logistics, energy and utility services; and digital content, business process improvement, technology modernization, and the creation of unified and compelling user experience services to communications, media and entertainment, education, and information services and technology companies. The company was incorporated in 1988 and is headquartered in Teaneck, New Jersey.

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