Wipro (NYSE:WIT) and Cognizant Technology Solutions (NASDAQ:CTSH) are both large-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, profitability, dividends, earnings and analyst recommendations.
Insider and Institutional Ownership
2.3% of Wipro shares are held by institutional investors. Comparatively, 87.7% of Cognizant Technology Solutions shares are held by institutional investors. 1.0% of Wipro shares are held by insiders. Comparatively, 0.3% of Cognizant Technology Solutions shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Analyst Ratings
This is a summary of recent recommendations and price targets for Wipro and Cognizant Technology Solutions, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Wipro | 1 | 2 | 1 | 0 | 2.00 |
Cognizant Technology Solutions | 3 | 8 | 13 | 0 | 2.42 |
Cognizant Technology Solutions has a consensus price target of $77.9048, suggesting a potential upside of 4.11%. Given Cognizant Technology Solutions' stronger consensus rating and higher possible upside, analysts plainly believe Cognizant Technology Solutions is more favorable than Wipro.
Dividends
Wipro pays an annual dividend of $0.01 per share and has a dividend yield of 0.2%. Cognizant Technology Solutions pays an annual dividend of $0.96 per share and has a dividend yield of 1.3%. Wipro pays out 4.5% of its earnings in the form of a dividend. Cognizant Technology Solutions pays out 24.1% 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. Cognizant Technology Solutions has raised its dividend for 1 consecutive years. Cognizant Technology Solutions is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
Wipro has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, Cognizant Technology Solutions has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500.
Earnings and Valuation
This table compares Wipro and Cognizant Technology Solutions' revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Wipro | $8.09 billion | 4.49 | $1.29 billion | $0.22 | 29.05 |
Cognizant Technology Solutions | $16.78 billion | 2.37 | $1.84 billion | $3.99 | 18.75 |
Cognizant Technology Solutions has higher revenue and earnings than Wipro. Cognizant Technology Solutions is trading at a lower price-to-earnings ratio than Wipro, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Wipro and Cognizant Technology Solutions' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Wipro | 15.72% | 17.14% | 11.71% |
Cognizant Technology Solutions | 8.78% | 19.04% | 11.79% |
Summary
Cognizant Technology Solutions beats Wipro on 12 of the 17 factors compared between the two stocks.