Is Cognizant Technology Solutions Corp. overvalued or undervalued?

As of 19 September 2025, the valuation grade for Cognizant Technology Solutions Corp. has moved from attractive to very attractive. The company appears to be undervalued, with a P/E ratio of 16, which is notably higher than the peer average of 13.98 for similar companies like Block, Inc. and CDW Corp. Additionally, the EV to EBITDA ratio stands at 10.58, which is lower than Block, Inc.'s 17.05, further indicating potential undervaluation. The PEG ratio of 2.07 also suggests that the stock may be undervalued relative to its growth prospects, especially when compared to Broadridge Financial Solutions, Inc. which has a PEG of 3.12.
In terms of performance, Cognizant has underperformed against the S&P 500 across multiple periods, with a year-to-date return of -12.95% compared to the S&P 500's 13.31%. This trend of underperformance may contribute to the current undervaluation, as the market may not fully recognize the company's potential despite its strong financial ratios.