Critical Analysis: The Hackett Group (NASDAQ:HCKT) & Cognizant Technology Solutions (NASDAQ:CTSH)

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

Risk and Volatility

The Hackett Group has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500. Comparatively, Cognizant Technology Solutions has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Valuation and Earnings

This table compares The Hackett Group and Cognizant Technology Solutions”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The Hackett Group	$305.63 million	0.91	$12.94 million	$0.65	17.25
Cognizant Technology Solutions	$21.64 billion	1.30	$2.23 billion	$4.65	13.40

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

Profitability

This table compares The Hackett Group and Cognizant Technology Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The Hackett Group	5.86%	34.77%	12.89%
Cognizant Technology Solutions	10.26%	17.70%	12.81%

Dividends

The Hackett Group pays an annual dividend of $0.48 per share and has a dividend yield of 4.3%. Cognizant Technology Solutions pays an annual dividend of $1.32 per share and has a dividend yield of 2.1%. The Hackett Group pays out 73.8% of its earnings in the form of a dividend. Cognizant Technology Solutions pays out 28.4% 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. The Hackett Group has increased its dividend for 1 consecutive years and Cognizant Technology Solutions has increased its dividend for 6 consecutive years.

Insider & Institutional Ownership

78.1% of The Hackett Group shares are held by institutional investors. Comparatively, 92.4% of Cognizant Technology Solutions shares are held by institutional investors. 11.8% of The Hackett Group shares are held by insiders. Comparatively, 0.4% of Cognizant Technology Solutions shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings for The Hackett Group and Cognizant Technology Solutions, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The Hackett Group	2	0	1	0	1.67
Cognizant Technology Solutions	1	13	10	0	2.38

The Hackett Group currently has a consensus target price of $16.50, suggesting a potential upside of 47.19%. Cognizant Technology Solutions has a consensus target price of $63.00, suggesting a potential upside of 1.11%. Given The Hackett Group’s higher possible upside, equities research analysts clearly believe The Hackett Group is more favorable than Cognizant Technology Solutions.

Summary

Cognizant Technology Solutions beats The Hackett Group on 10 of the 17 factors compared between the two stocks.

About The Hackett Group

The Hackett Group, Inc. operates as an intellectual property-based executive advisory, strategic consulting, and digital transformation company in the United States, Europe, and internationally. The company operates through three segments: Global Strategy & Business Transformation, Oracle Solutions, and SAP Solutions. It offers Hackett Connect, an online searchable repository; best practice accelerators that provide web-based access to best practices, customized software configuration tools, and best practice process flows; advisor inquiry for access to fact-based advice on proven approaches and methods; best practice research that provides insights into the proven approaches; and peer interaction comprising member-led webcasts, annual best practice conferences, annual member forums, membership performance surveys, and client-submitted content, as well as IP-as-a-service and Hackett Institute programs. The company also provides benchmarking services that conduct studies for selling, general and administrative, finance, human resources, information technology, procurement, enterprise performance management, and shared services; and business transformation practices which help clients develop a coordinated digital transformation strategy. In addition, it offers oracle solutions that help clients to choose and deploy oracle applications that best meet their needs and objectives. Further, the company provides SAP solutions, including planning, architecture, and vendor evaluation and selection through implementation, customization, testing, and integration; post-implementation support, change and exception management, process transparency, system documentation, and end-user training; and off-shore application development, and application maintenance and support services. The company was formerly known as Answerthink, Inc. and changed its name to The Hackett Group, Inc. in 2008. The Hackett Group, Inc. was founded in 1991 and is headquartered in Miami, Florida.

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.