CTSH Lost 5.0% In A Month. Do You Buy Or Wait?
Cognizant Technology Solutions (CTSH) stock is down 5.0% in 21 trading days. Already own the stock? You might want to consider holding it. Planning to buy? This might be your opportunity. Consider the following data:
- Size: A $33 Bil company with $20 Bil in revenue currently trading at $66.94.
- Fundamentals: Last 12 month revenue growth of 4.1% and operating margin of 15.4%.
- Liquidity: Has Debt to Equity ratio of 0.04 and Cash to Assets ratio of 0.1
- Valuation: Currently trading at P/E multiple of 14.0 and P/EBIT multiple of 10.5
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 76.3% within a year. See CTSH Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for CTSH, see Buy or Sell CTSH Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and CTSH drops another 20-30% to $46.86 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Cognizant Technology Solutions (CTSH) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: CTSH provides consulting, technology, and outsourcing services across Financial Services, Healthcare, Products and Resources, and Communications sectors globally.
2022 Inflation Shock
- CTSH stock fell 44.2% from a high of $93.12 on 22 March 2022 to $51.96 on 3 November 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $90.70 on 17 February 2025 , and currently trades at $66.94
| CTSH | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -44.2% | -25.4% |
| Time to Full Recovery | Not Fully Recovered days | 464 days |
2020 Covid Pandemic
- CTSH stock fell 41.7% from a high of $71.42 on 6 February 2020 to $41.61 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 7 October 2020
| CTSH | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -41.7% | -33.9% |
| Time to Full Recovery | 198 days | 148 days |
2018 Correction
- CTSH stock fell 32.9% from a high of $84.83 on 15 March 2018 to $56.88 on 13 May 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 21 December 2021
| CTSH | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -32.9% | -19.8% |
| Time to Full Recovery | 953 days | 120 days |
2008 Global Financial Crisis
- CTSH stock fell 69.1% from a high of $23.72 on 7 February 2007 to $7.34 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 13 January 2010
| CTSH | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -69.1% | -56.8% |
| Time to Full Recovery | 419 days | 1480 days |
Worried that CTSH could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.