Head-To-Head Analysis: Cognizant Technology Solutions (NASDAQ:CTSH) and DXC Technology (NYSE:DXC)

DXC Technology (NYSE:DXC) and Cognizant Technology Solutions (NASDAQ:CTSH) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.

Analyst Ratings

This is a summary of current ratings and price targets for DXC Technology and Cognizant Technology Solutions, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DXC Technology	3	7	0	0	1.70
Cognizant Technology Solutions	0	14	10	0	2.42

DXC Technology presently has a consensus target price of $12.25, indicating a potential upside of 31.71%. Cognizant Technology Solutions has a consensus target price of $64.26, indicating a potential upside of 49.41%. Given Cognizant Technology Solutions’ stronger consensus rating and higher possible upside, analysts plainly believe Cognizant Technology Solutions is more favorable than DXC Technology.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DXC Technology	$12.64 billion	0.12	$18.00 million	$0.06	155.02
Cognizant Technology Solutions	$21.11 billion	0.97	$2.23 billion	$4.60	9.35

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
DXC Technology	0.14%	17.24%	4.35%
Cognizant Technology Solutions	10.41%	17.50%	12.94%

Risk and Volatility

DXC Technology has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, Cognizant Technology Solutions has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Institutional and Insider Ownership

96.2% of DXC Technology shares are owned by institutional investors. Comparatively, 92.4% of Cognizant Technology Solutions shares are owned by institutional investors. 1.1% of DXC Technology shares are owned by insiders. Comparatively, 0.4% of Cognizant Technology Solutions shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Cognizant Technology Solutions beats DXC Technology on 11 of the 14 factors compared between the two stocks.

About DXC Technology

DXC Technology Company, together with its subsidiaries, provides information technology services and solutions in the United States, the United Kingdom, rest of Europe, Australia, and internationally. It operates in two segments, Global Business Services (GBS) and Global Infrastructure Services (GIS). The GBS segment offers a portfolio of analytics services and extensive partner ecosystem that help its customers to gain insights, automate operations, and accelerate their transformation journeys; and software engineering, consulting, and data analytics solutions, which enable businesses to run and manage their mission-critical functions, transform their operations, and develop new ways of doing business. This segment also simplifies, modernize, and accelerate mission-critical applications that support business agility and growth through applications services; provides proprietary modular insurance software and platforms; and operates a wide spectrum of insurance business process services, as well as helps to operate and improve bank cards, payment and lending process and operations, and customer experiences. The GIS segment offers security services, such as IT security, operations and culture for migrating to the cloud, protecting data with a zero-trust strategy, and manage a security operation center; and cloud infrastructure and IT outsourcing services. This segment also delivers a consumer-like experience, centralize IT management, and support services, as well as improves the total cost of ownership; and orchestrates hybrid cloud and multicloud environments. The company markets and sells its products through direct sales force to commercial businesses and public sector enterprises. DXC Technology Company was founded in 1959 and is headquartered in Ashburn, Virginia.

About Cognizant Technology Solutions

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.