CTSH Revenue

As a value investing shop, we are interested in seeing how CTSH's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 7.42x and the low end of the range at 3.85x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for CTSH of 4.62x is significantly below its average levels historically. In fact, with a current price of 58.49, CTSH is a full 18% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for CTSH.

CTSH Cash Earnings

As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of CTSH, Ockham views their current Cash Earnings as significantly below its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from CTSH. For example, CTSH's Cash Earnings ratio per share has fluctuated between 23.23 and 45.27 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where CTSH is with respect to prior business periods.

So with CTSH's current price (latest close of 58.49) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, CTSH is 18% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn't exist in a vacuum. So if the market doesn't recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with CTSH.

CTSH Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for CTSH to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis. As far as our investing methodology goes, it is not necessary to pay a dividend in order to get a favorable rating, so as for right now CTSH gets a neutral rating for the dividend portion of the model. As you can see, we are not receiving historical dividend information from our data provider on CTSH at this time.