Science Applications International (NASDAQ:SAIC) & Cognizant Technology Solutions (NASDAQ:CTSH) Financial Analysis

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

Institutional and Insider Ownership

92.4% of Cognizant Technology Solutions shares are owned by institutional investors. Comparatively, 76.0% of Science Applications International shares are owned by institutional investors. 0.3% of Cognizant Technology Solutions shares are owned by insiders. Comparatively, 0.7% of Science Applications International shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Cognizant Technology Solutions pays an annual dividend of $1.24 per share and has a dividend yield of 1.7%. Science Applications International pays an annual dividend of $1.48 per share and has a dividend yield of 1.7%. Cognizant Technology Solutions pays out 28.8% of its earnings in the form of a dividend. Science Applications International pays out 17.9% 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 6 consecutive years. Science Applications International is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Cognizant Technology Solutions and Science Applications International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cognizant Technology Solutions	10.20%	17.00%	12.61%
Science Applications International	5.35%	33.36%	9.90%

Valuation and Earnings

This table compares Cognizant Technology Solutions and Science Applications International”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cognizant Technology Solutions	$20.86 billion	1.73	$2.24 billion	$4.31	17.38
Science Applications International	$7.48 billion	0.52	$362.00 million	$8.26	10.30

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

Volatility and Risk

Cognizant Technology Solutions has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500. Comparatively, Science Applications International has a beta of 0.43, indicating that its share price is 57% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Cognizant Technology Solutions and Science Applications International, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cognizant Technology Solutions	0	12	7	0	2.37
Science Applications International	0	1	0	0	2.00

Cognizant Technology Solutions currently has a consensus price target of $85.19, suggesting a potential upside of 13.70%. Given Cognizant Technology Solutions’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Cognizant Technology Solutions is more favorable than Science Applications International.

Summary

Cognizant Technology Solutions beats Science Applications International on 12 of the 17 factors compared between the two stocks.

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.

About Science Applications International

Science Applications International Corporation provides technical, engineering, and enterprise information technology (IT) services primarily in the United States. The company’s offerings include engineering; technology integration; IT modernization; maintenance of ground and maritime systems; logistics; training and simulation; operation and program support services; and end-to-end services, such as design, development, integration, deployment, management and operations, sustainment, and security of its customers’ IT infrastructure, as well as cloud migration, managed services, infrastructure modernization, and enterprise IT-as-a-service solutions. It serves the U.S. military comprising Army, Air Force, Navy, Marines, and Coast Guard; Department of Defense agencies; National Aeronautics and Space Administration; the U.S. Department of State; Department of Justice; Department of Homeland Security; and various intelligence community agencies, as well as U.S. federal civilian agencies. The company was formerly known as SAIC Gemini, Inc. and changed its name to Science Applications International Corporation in September 2013. Science Applications International Corporation was founded in 1969 and is headquartered in Reston, Virginia.