Financial Survey: Cognizant Technology Solutions (NASDAQ:CTSH) versus GDS (NASDAQ:GDS)

Cognizant Technology Solutions (NASDAQ:CTSH) and GDS (NASDAQ:GDS) are both technology companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, valuation, analyst recommendations, institutional ownership, profitability and earnings.

Analyst Ratings

This is a breakdown of current recommendations for Cognizant Technology Solutions and GDS, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cognizant Technology Solutions	1	13	10	0	2.38
GDS	0	2	3	1	2.83

Cognizant Technology Solutions presently has a consensus target price of $63.00, indicating a potential downside of 0.44%. GDS has a consensus target price of $48.12, indicating a potential upside of 58.07%. Given GDS’s stronger consensus rating and higher probable upside, analysts plainly believe GDS is more favorable than Cognizant Technology Solutions.

Valuation & Earnings

This table compares Cognizant Technology Solutions and GDS”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cognizant Technology Solutions	$21.11 billion	1.35	$2.23 billion	$4.65	13.61
GDS	$1.63 billion	3.73	$132.10 million	$2.15	14.16

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

Institutional and Insider Ownership

92.4% of Cognizant Technology Solutions shares are held by institutional investors. Comparatively, 33.7% of GDS shares are held by institutional investors. 0.4% of Cognizant Technology Solutions shares are held by insiders. Comparatively, 8.0% of GDS shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cognizant Technology Solutions	10.26%	17.70%	12.81%
GDS	30.70%	17.94%	6.11%

Risk & Volatility

Cognizant Technology Solutions has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, GDS has a beta of 0.43, meaning that its share price is 57% less volatile than the S&P 500.

Summary

GDS beats Cognizant Technology Solutions on 8 of the 15 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 GDS

GDS Holdings Limited, together with its subsidiaries, develops and operates data centers in the People's Republic of China. The company provides colocation services comprising critical facilities space, customer-available power, racks, and cooling; managed hosting services, including business continuity and disaster recovery, network management, data storage, system security, operating system, database, and server middleware services; managed cloud services; and consulting services. It serves cloud service providers, large Internet companies, financial institutions, telecommunications and IT service providers, and large domestic private sector and multinational corporations. GDS Holdings Limited was founded in 2001 and is headquartered in Shanghai, the People's Republic of China.