Critical Comparison: Jack Henry & Associates (NASDAQ:JKHY) vs. Cognizant Technology Solutions (NASDAQ:CTSH)

Cognizant Technology Solutions (NASDAQ:CTSH) and Jack Henry & Associates (NASDAQ:JKHY) are both large-cap computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of recent recommendations for Cognizant Technology Solutions and Jack Henry & Associates, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cognizant Technology Solutions	0	12	9	0	2.43
Jack Henry & Associates	0	6	6	1	2.62

Cognizant Technology Solutions currently has a consensus price target of $90.28, indicating a potential upside of 17.69%. Jack Henry & Associates has a consensus price target of $199.73, indicating a potential upside of 14.93%. Given Cognizant Technology Solutions’ higher probable upside, equities analysts plainly believe Cognizant Technology Solutions is more favorable than Jack Henry & Associates.

Dividends

Cognizant Technology Solutions pays an annual dividend of $1.24 per share and has a dividend yield of 1.6%. Jack Henry & Associates pays an annual dividend of $2.32 per share and has a dividend yield of 1.3%. Cognizant Technology Solutions pays out 28.8% of its earnings in the form of a dividend. Jack Henry & Associates pays out 35.3% 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 increased its dividend for 6 consecutive years and Jack Henry & Associates has increased its dividend for 35 consecutive years. Cognizant Technology Solutions is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

92.4% of Cognizant Technology Solutions shares are owned by institutional investors. Comparatively, 98.8% of Jack Henry & Associates shares are owned by institutional investors. 0.3% of Cognizant Technology Solutions shares are owned by insiders. Comparatively, 0.6% of Jack Henry & Associates shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Cognizant Technology Solutions and Jack Henry & Associates’ 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%
Jack Henry & Associates	20.59%	24.01%	16.87%

Volatility and Risk

Cognizant Technology Solutions has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, Jack Henry & Associates has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500.

Earnings & Valuation

This table compares Cognizant Technology Solutions and Jack Henry & Associates”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cognizant Technology Solutions	$19.74 billion	1.88	$2.24 billion	$4.31	17.80
Jack Henry & Associates	$2.38 billion	5.30	$455.75 million	$6.58	26.41

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

Summary

Jack Henry & Associates beats Cognizant Technology Solutions on 11 of the 18 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 Jack Henry & Associates

Jack Henry & Associates, Inc. is a financial technology company, which engages in the provision of technology solutions and payment processing services. It operates through the following segments: Core, Payments, Complementary, and Corporate and Other. The Core segment provides core information processing platforms to banks and credit unions which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer and member information. The Payments segment includes secure payment processing tools and services including ATM, debit, and credit card processing services, online and mobile bill pay solutions, ACH origination and remote deposit capture processing, and risk management products and services. The Complementary segment focuses on additional software, hosted processing platforms, and services including call center support, network security management, consulting, and monitoring. The Corporate and Other segment offers hardware and other products. The company was founded by Jerry D. Hall and John W. Henry in 1976 and is headquartered in Monett, MO.