Just like Gross Margin %, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions. Peter Lynch prefers those with higher margins than those with lower margins.
Be Aware
Operating Margin % can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).
If a company is facing competition, its Operating Margin % may decline. Often the Operating Margin % declines well before the company's Revenue or even profit decline. Therefore, Operating Margin % is a very important indicator of whether the company is facing problems.
For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokias Operating Margin % had already been in decline since 2002, although its Earnings per Share (Diluted) were still rising. Investors who paid attention to Operating Margin % would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).
Therefore, Operating Margin % is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.
Cognizant Technology Solutions Operating Margin % Related Terms
Cognizant Technology Solutions Operating Margin % Historical Data
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
MEX:CTSH vs FISV, FIS, BR: Operating Margin % Comparison
For the Information Technology Services subindustry, Cognizant Technology Solutions's Operating Margin %, along with its competitors' market caps and Operating Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Cognizant Technology Solutions Operating Margin % vs Software Industry
For the Software industry and Technology sector, Cognizant Technology Solutions's Operating Margin % distribution charts can be found below:
* The bar in red indicates where Cognizant Technology Solutions's Operating Margin % falls into.
Operating Margin % - also known as operating income margin, operating profit margin and return on sales (ROS) - is the ratio of Operating Income divided by net sales or Revenue, usually presented in percent.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Cognizant Technology Solutions (MEX:CTSH) has a Operating Margin % of 15.57% as of Mar. 2026. Operating margin is the ratio of total operating income to net sales. View historical data on Cognizant Technology Solutions and its competitors. This is near median its historical median of 15.55. Over the past decade, Cognizant Technology Solutions' Operating Margin % has ranged from 13.99 to 17.49. According to the industry distribution chart, Cognizant Technology Solutions ranks #498 out of 2818 companies in the Software industry, placing it in the top 17.7%.
Is Cognizant Technology Solutions' Operating Margin % too high?
Cognizant Technology Solutions' current Operating Margin % of 15.57% is near median its 10-year median of 15.55. Over the past 10 years, this metric has ranged from a low of 13.99 to a high of 17.49. The Software industry median Operating Margin % is 3.88. Cognizant Technology Solutions' value of 15.57% is 301.8% above this industry median. Based on the distribution chart, Cognizant Technology Solutions ranks #498 out of 2818 companies in the Software industry, which is in the top quartile — a strong position relative to peers. Overall, Cognizant Technology Solutions has a GF Score™ of 66/100 and is considered Significantly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Cognizant Technology Solutions' Operating Margin % compare to FISV and FIS?
According to the Software industry distribution chart, Cognizant Technology Solutions ranks #498 out of 2818 companies for Operating Margin %. This places Cognizant Technology Solutions in the top 18% of its industry — outperforming the majority of peers. The industry median Operating Margin % is 3.88. Cognizant Technology Solutions' value of 15.57% is 301.8% above this benchmark. Historically, Cognizant Technology Solutions' own Operating Margin % has ranged from 13.99 to 17.49 over the past decade. While the company's 10-year median is 15.55 vs. the industry median of 3.88, Cognizant Technology Solutions has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Operating Margin % for a Software company?
The median Operating Margin % among Software companies is 3.88, based on 2,818 companies in the industry. Companies in the top quartile (top 25%) have a Operating Margin % significantly above this median, while those in the bottom quartile fall well below. However, Operating Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Cognizant Technology Solutions's current Operating Margin % of 15.57% is 301.8% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Operating Margin % mean?
A high Operating Margin % can signal that a stock is expensive relative to its fundamentals. Operating margin is the ratio of total operating income to net sales. View historical data on Cognizant Technology Solutions and its competitors. For the Software industry, the median Operating Margin % is 3.88 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Cognizant Technology Solutions's current Operating Margin % is 15.57%, which is near median its own 10-year median of 15.55. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Cognizant Technology Solutions stock overvalued right now?
Based on GuruFocus' analysis, Cognizant Technology Solutions (MEX:CTSH) is currently considered Significantly Undervalued. The stock's GF Value™ is MXN1,477.03, compared to a current price of MXN722.03 — trading 51.1% below its estimated fair value. The current Operating Margin % is 15.57%, which is near median its 10-year median of 15.55 and 301.8% above the Software industry median of 3.88. Cognizant Technology Solutions' overall GF Score™ is 66/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Operating Margin % calculated?
Operating Margin % is calculated from a company's financial statements. For Cognizant Technology Solutions (MEX:CTSH), the current Operating Margin % is 15.57% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Cognizant Technology Solutions (MEX:CTSH) Overvalued in 2026?
Based on GuruFocus' analysis, Cognizant Technology Solutions stock appears to be undervalued.
The current stock price of MXN722.03 is trading 51.1% below its estimated GF Value™ of MXN1,477.03.
GuruFocus considers Cognizant Technology Solutions to be Significantly Undervalued.
Key valuation signals for MEX:CTSH:
Operating Margin %: 15.57% (near median its 10-year median of 15.55)
GF Value™: MXN1,477.03 vs. price of MXN722.03 (51.1% below fair value)
Industry Position: 301.8% above the Software median (#498 of 2818)
No single metric tells the full story. See the MEX:CTSH stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Cognizant Technology Solutions Business Description
Cognizant Technology Solutions is a multinational IT services provider that offers a range of consulting and business process outsourcing services. Originally founded in India, the company is headquartered in the US and serves enterprise customers spanning the financial services, healthcare, and resources industries. With most of its workforce located in India, Cognizant leverages a global delivery model that helps clients outsource their IT needs to offshore labor.
66GF Score
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