Comparing Two IT Solutions Companies

Accenture PLC (ACN, Financial) focuses on making companies more operationally effecient through management consulting, technology and outsourcing services.

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ACN has a pretty high P/B ratio of 9.1. They have been paying dividends since 2005, have a current dividend yield of 2.6% and a dividend payout ratio of 45% when compared with earnings, and 40% when compared with free cash flow. They pay dividends on a semi-annual basis. They have a P/E of 17.40 and a P/FCF of 19.2.

Using GuruFocus' DCF calculator and inputing free cash flow per share, ACN has a fair value of $130.67 before tangible book value and a margin of safety of 41%.

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Cognizant Technology Solutions Corp. (CTSH, Financial) is also involved in making companies more operationally effecient through management consulting, technology and outsourcing services.

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CTSH has a P/B ratio of 3.9. They do not pay any dividends at this time. They have a P/E of 19.8 and a P/FCF of 20.55. Using the DCF calculator, and inputing free cash flow per share, we get a fair value of $61.78 before tangible book value, and a margin of safety of 28%.

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