In the rapidly evolving landscape of technology, two companies stand out for their innovative approaches: Cognizant Technology Solutions Corporation (CTSH) and Zscaler, Inc. (ZS). Both operate within the technology sector but focus on distinct areas—Cognizant excels in IT services and consulting, while Zscaler specializes in cloud security solutions. This article aims to analyze their strategies, market overlaps, and growth potential to help you determine which company might be the more compelling investment opportunity.
Table of contents
Company Overview
Cognizant Technology Solutions Corporation Overview
Cognizant Technology Solutions Corporation (CTSH) is a prominent player in the information technology services sector. Founded in 1994 and headquartered in Teaneck, NJ, the company specializes in consulting, technology, and outsourcing services. Cognizant operates through several segments, focusing on financial services, healthcare, products and resources, and communications. With a mission to enhance customer experiences through advanced technologies such as AI and robotic process automation, Cognizant is well-positioned to drive operational improvements for clients across diverse industries. As of now, the company has a market capitalization of approximately $38.2B and employs about 336K individuals globally.
Zscaler, Inc. Overview
Zscaler, Inc. (ZS), founded in 2007 and based in San Jose, CA, is a leader in cloud security solutions. The company provides secure access to both externally managed and internally hosted applications through its innovative platform. Zscaler’s offerings include Zscaler Internet Access and Zscaler Private Access, which cater to a wide range of industries including financial services, healthcare, and telecommunications. As a cloud-native solution, Zscaler emphasizes security and compliance while enhancing user experience. With a market capitalization of around $39.1B and a workforce of approximately 7.3K employees, Zscaler is at the forefront of the software infrastructure industry.
Key similarities and differences
Both Cognizant and Zscaler operate within the technology sector, focusing on innovation and service delivery to enhance client operations. However, their business models differ significantly; Cognizant is primarily engaged in IT services and consulting, while Zscaler specializes in cloud security solutions, reflecting a more niche focus on cybersecurity and compliance.
Income Statement Comparison
Below is a comparison of the latest income statements for Cognizant Technology Solutions Corporation (CTSH) and Zscaler, Inc. (ZS), providing insight into their financial performance.
| Metric | Cognizant Technology Solutions (CTSH) | Zscaler, Inc. (ZS) |
|---|---|---|
| Market Cap | 38.20B | 39.12B |
| Revenue | 19.74B | 2.67B |
| EBITDA | 3.53B | 112M |
| EBIT | 2.99B | -8.77M |
| Net Income | 2.24B | -41.48M |
| EPS | 4.52 | -0.27 |
| Fiscal Year | 2024 | 2025 |
Interpretation of Income Statement
In the latest fiscal year, Cognizant reported a revenue increase, reflecting stable growth trends, while net income remained robust at 2.24B, indicating effective cost management. Zscaler, on the other hand, showed a significant increase in revenue relative to previous years; however, it still incurred a net loss of 41.48M. The negative EBIT and EBITDA suggest ongoing challenges in profitability despite revenue growth, indicating a potential need for improved operational efficiency. Overall, while Cognizant maintains a strong financial position, Zscaler’s performance highlights a concerning trend that warrants close monitoring.
Financial Ratios Comparison
The following table presents a comparative analysis of financial ratios for Cognizant Technology Solutions Corporation (CTSH) and Zscaler, Inc. (ZS) based on the most recent available data.
| Metric | CTSH | ZS |
|---|---|---|
| ROE | 15.55% | -2.31% |
| ROIC | 13.24% | -7.11% |
| P/E | 17.03 | – |
| P/B | 2.65 | 24.51 |
| Current Ratio | 2.09 | 2.01 |
| Quick Ratio | 2.09 | 2.01 |
| D/E | 0.10 | 0.99 |
| Debt-to-Assets | 7.53% | 27.98% |
| Interest Coverage | 53.56 | -13.49 |
| Asset Turnover | 0.99 | 0.42 |
| Fixed Asset Turnover | 12.77 | 4.22 |
| Payout ratio | 26.79% | 0% |
| Dividend yield | 1.57% | 0% |
Interpretation of Financial Ratios
Cognizant shows strong financial health with a solid ROE and low debt levels, indicating efficient capital use and manageable leverage. In contrast, Zscaler’s negative ratios and high P/B ratio suggest potential overvaluation and operational challenges. Investors should exercise caution, particularly with Zscaler, given its heavy reliance on debt and poor profitability metrics.
Dividend and Shareholder Returns
Cognizant Technology Solutions (CTSH) offers a dividend with a payout ratio of approximately 27%, yielding about 1.57%. This suggests a sustainable distribution supported by free cash flow, though investors should monitor risks related to excessive repurchases. Conversely, Zscaler (ZS) does not pay dividends, prioritizing reinvestment for growth instead. While this strategy may enhance long-term value, the lack of immediate returns could deter some investors. Overall, CTSH’s dividend supports sustainable shareholder value creation, while ZS’s approach emphasizes growth potential.
Strategic Positioning
Cognizant Technology Solutions (CTSH) holds a significant market share in the Information Technology Services sector, leveraging its diverse service offerings across multiple industries like healthcare and financial services. In comparison, Zscaler (ZS) focuses on cloud security solutions, facing intense competition from both established firms and emerging startups in the fast-evolving cybersecurity landscape. Both companies must navigate technological disruptions, with Zscaler particularly impacted by the rapid shift towards cloud-based services amid increasing security concerns.
Stock Comparison
In this section, I will analyze the weekly stock price movements of Cognizant Technology Solutions Corporation (CTSH) and Zscaler, Inc. (ZS) over the past year, highlighting key price dynamics and significant trading trends.
Trend Analysis
Cognizant Technology Solutions Corporation (CTSH) Over the past year, CTSH has experienced a price change of +6.69%, indicating a bullish trend. The stock shows signs of acceleration, with notable price fluctuations between a high of 90.7 and a low of 64.26. The standard deviation of 5.21 suggests moderate volatility in its price movements, reflecting investor interest. In the recent period from September 14 to November 30, 2025, the stock saw a price increase of +12.35%, further supporting the bullish outlook.
Zscaler, Inc. (ZS) ZS has exhibited a price change of +19.87% over the past year, also indicating a bullish trend. However, the trend is characterized by deceleration, with price variations ranging from a high of 331.14 to a low of 156.78. The standard deviation of 47.31 signals higher volatility, which may reflect investor uncertainty. Notably, in the recent period from September 14 to November 30, 2025, ZS experienced a price decline of -11.19%, contrasting with its overall annual performance.
Analyst Opinions
Recent analyst recommendations for Cognizant Technology Solutions Corporation (CTSH) are predominantly positive, with an ‘A’ rating reflecting strong performance metrics across several financial indicators. Analysts emphasize its robust return on assets and equity, suggesting a buy consensus. On the other hand, Zscaler, Inc. (ZS) has received a ‘C-‘ rating, indicating significant concerns regarding its financial health, particularly in return metrics, leading to a hold recommendation. Overall, the consensus for CTSH is a strong buy, while ZS shows caution among analysts.
Stock Grades
In this section, I will present the most recent stock grades for Cognizant Technology Solutions Corporation (CTSH) and Zscaler, Inc. (ZS) from reputable grading companies.
Cognizant Technology Solutions Corporation (CTSH) Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| William Blair | upgrade | Outperform | 2025-11-21 |
| JP Morgan | maintain | Overweight | 2025-10-30 |
| RBC Capital | maintain | Sector Perform | 2025-10-30 |
| Wells Fargo | maintain | Overweight | 2025-10-30 |
| UBS | maintain | Neutral | 2025-10-30 |
| Guggenheim | maintain | Buy | 2025-10-21 |
| JP Morgan | maintain | Overweight | 2025-08-20 |
| Baird | maintain | Neutral | 2025-07-31 |
| JP Morgan | maintain | Overweight | 2025-07-31 |
| JP Morgan | maintain | Overweight | 2025-07-28 |
Zscaler, Inc. (ZS) Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Stifel | maintain | Buy | 2025-11-26 |
| Rosenblatt | maintain | Buy | 2025-11-26 |
| B of A Securities | maintain | Buy | 2025-11-26 |
| Scotiabank | maintain | Sector Outperform | 2025-11-26 |
| Mizuho | maintain | Neutral | 2025-11-26 |
| UBS | maintain | Buy | 2025-11-26 |
| Needham | maintain | Buy | 2025-11-26 |
| Baird | maintain | Outperform | 2025-11-26 |
| BTIG | maintain | Buy | 2025-11-26 |
| Bernstein | maintain | Outperform | 2025-11-26 |
Overall, both stocks show a positive trend with multiple “Buy” ratings, particularly for Zscaler, which has maintained strong grades across various grading companies. Cognizant has received an upgrade from William Blair to “Outperform,” indicating a potential upward shift in investor sentiment.
Target Prices
The analyst consensus presents reliable target prices for both Cognizant Technology Solutions Corporation (CTSH) and Zscaler, Inc. (ZS).
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Cognizant Technology Solutions Corporation (CTSH) | 85 | 78 | 82.8 |
| Zscaler, Inc. (ZS) | 360 | 264 | 320.64 |
For Cognizant, the consensus target price of 82.8 suggests potential upside given the current price of 77.72. Meanwhile, Zscaler’s target consensus of 320.64 indicates a strong expectation for growth compared to its current price of 250.92.
Strengths and Weaknesses
The following table summarizes the strengths and weaknesses of Cognizant Technology Solutions Corporation (CTSH) and Zscaler, Inc. (ZS) based on the most recent data.
| Criterion | Cognizant Technology Solutions (CTSH) | Zscaler, Inc. (ZS) |
|---|---|---|
| Diversification | High, operates across multiple sectors | Moderate, focused on cloud security |
| Profitability | Net profit margin: 11.35% | Negative, recent trends show losses |
| Innovation | Strong in AI and automation services | Leading in cloud security innovations |
| Global presence | Extensive, operates worldwide | Growing, primarily in North America and Europe |
| Market Share | Significant in IT services | Emerging player in cloud security |
| Debt level | Low debt-to-equity ratio: 0.10 | High debt-to-equity ratio: 0.99 |
Key takeaways from this analysis indicate that while Cognizant is well-diversified and profitable, Zscaler is innovative but faces challenges with profitability and debt. Investors should weigh these factors carefully.
Risk Analysis
The following table outlines the various risks associated with Cognizant Technology Solutions Corporation (CTSH) and Zscaler, Inc. (ZS) for the most recent year.
| Metric | Cognizant Technology Solutions (CTSH) | Zscaler, Inc. (ZS) |
|---|---|---|
| Market Risk | Moderate | High |
| Regulatory Risk | Low | Moderate |
| Operational Risk | Moderate | High |
| Environmental Risk | Low | Moderate |
| Geopolitical Risk | Moderate | High |
Both companies face considerable market and operational risks, particularly Zscaler, which operates in a highly volatile cybersecurity sector. Recent high-profile data breaches underscore the need for robust security solutions, thus amplifying Zscaler’s market risk.
Which one to choose?
When comparing Cognizant Technology Solutions (CTSH) and Zscaler, Inc. (ZS), the fundamentals suggest a clear distinction in their financial health and growth prospects. CTSH has a solid market cap of $38.1B and shows impressive margins (net profit margin at 11.35%) with an A rating from analysts, indicating strong operational efficiency. In contrast, ZS, with a market cap of $44.1B, is grappling with negative profitability (net margin of -1.55%) and has received a C- rating, highlighting concerns about its operational viability.
CTSH’s stock trend appears bullish with a 12.35% increase recently, while ZS shows signs of deceleration despite a 19.87% increase over the past year. For growth-focused investors, CTSH seems more favorable, while those prioritizing high-risk, high-reward growth may still consider ZS.
It is crucial to note the competitive landscape and ongoing market volatility which may impact both companies’ performances.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of Cognizant Technology Solutions Corporation and Zscaler, Inc. to enhance your investment decisions:
