Three IT Service Stocks That May Be Running on Full Bandwidth
This week, we use AAII’s A+ Investor Stock Grades to provide insight into three information technology (IT) service stocks. With the IT services market expected to grow its revenue at a 5.6% annual rate through 2029, should you consider the three stocks of CI&T Inc. (CINT), Cognizant Technology Solutions Corp. (CTSH) and Wipro Ltd. (WIT)?
IT Service Stocks Recent News
The IT service industry is growing quickly as more businesses rely on cloud computing, cybersecurity and artificial intelligence (AI) to improve efficiency and security. Companies are investing in IT services to modernize operations and stay competitive. As technology becomes more important, the demand for IT services will continue to rise.
The global IT service market should reach $1.51 trillion in revenue in 2025, according to Statista. IT outsourcing is expected to be the largest segment, with projected market volume of $591.24 billion for the year. The industry is projected to grow 5.6% per year from 2025 to 2029, reaching $1.88 trillion in market volume by 2029. The U.S. is projected be the largest IT service market, generating $550.28 billion in revenue, emphasizing cloud computing and digital transformation.
While big technology companies dominate the news, smaller IT service providers specializing in AI, automation and security are also growing. Companies such as CI&T, Cognizant Technology Solutions and Wipro may present attractive opportunities for investors looking to benefit from the industry’s long-term expansion. As more industries depend on IT services, the market will continue to offer strong investment opportunities for years to come.
Grading IT Service Stocks With AAII’s A+ Stock Grades
When analyzing a company, it is helpful to have an objective framework that allows you to compare companies in the same way. This is why AAII created the A+ Stock Grades, which evaluate companies across five factors that research and real-world investment results indicate to identify market-beating stocks in the long run: value, growth, momentum, earnings estimate revisions (and surprises) and quality.
Using AAII’s A+ Stock Grades, the following table summarizes the attractiveness of three IT service stocks — CI&T, Cognizant Technology Solutions and Wipro — based on their fundamentals.
AAII’s A+ Stock Grade Summary for Three IT Service Stocks
What the A+ Stock Grades Reveal
CI&T Inc. (CINT), together with its subsidiaries, provides strategy, design and software engineering services to enable digital transformation for enterprises and companies worldwide. It is also involved in the development of customizable software through the implementation of software solutions, including machine learning, AI, analytics, cloud migration and mobility technologies. The company was founded in 1995 and is headquartered in Campinas, Brazil.
CI&T has a Value Grade of A, based on its Value Score of 85, which is deep value. Higher scores indicate a more attractive stock for value investors and, thus, a better grade. The Value Grade is the percentile rank of the average of the percentile ranks of the price-to-sales (P/S) ratio, price-earnings (P/E) ratio, price-to-book-value (P/B) ratio, price-to-free-cash-flow (P/FCF) ratio, shareholder yield and the ratio of enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA).
CI&T has a shareholder yield of 22.3%, which ranks in the 1st percentile among all U.S.-listed stocks. Its price-to-free-cash-flow ratio is 2.7, which ranks in the 6th percentile and is well below the sector median of 26.4. This suggests that CI&T’s stock may be undervalued in terms of its ability to generate free cash flow compared to similar companies in its sector.
CI&T has a Momentum Grade of A, based on its Momentum Score of 81. This means that the stock’s momentum is very strong in terms of its weighted relative price strength over the last four quarters. The weighted four-quarter relative strength rank is the relative price change for each of the past four quarters, with the most recent quarterly price change given a weight of 40% and each of the three previous quarters given a weight of 20%. The quarterly ranks are 62, 50, 90 and 85, sequentially from the most recent quarter, with higher ranks signaling stronger price momentum. The weighted four-quarter relative price strength is 8.5%.
CI&T has a Growth Grade of B, which is strong. The components of the Growth Composite Score consider a company’s success in growing sales on a year-over-year and long-term annualized basis and its ability to consistently generate positive cash from its core operations. The company has a five-year annualized sales growth rate of 17.8% and has generated positive annual cash from operations in the past five consecutive years.
Cognizant Technology Solutions Corp. (CTSH) provides global consulting, technology and outsourcing services. It operates through four segments: financial services, health sciences, products and resources, and communications, media and technology. The company offers AI, digital engineering, application development, systems integration, cloud, cybersecurity, automation, infrastructure and business process services. It also provides AI-led automation, IT automation and business process outsourcing to enhance efficiency and customer experience. Additionally, Cognizant Technology Solutions develops and supports proprietary and third-party software and industry-specific solutions for health care, finance, manufacturing, retail, travel, media, education, logistics, energy and utilities. The company was founded in 1988 and is headquartered in Teaneck, New Jersey.
Cognizant Technology Solutions has a Quality Grade of B, based on a score of 78, which is strong. Higher-quality stocks possess traits associated with upside potential and reduced downside risk. The Quality Grade is the percentile rank of the average of the percentile ranks of return on assets (ROA), return on invested capital (ROIC), gross profit to assets, buyback yield, change in total liabilities to assets, accruals to assets, Z double prime bankruptcy risk (Z) score and F-Score. To be assigned a Quality Score, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.
Cognizant Technology Solutions ranks strongly in terms of its return on assets and return on invested capital. It has a return on assets of 11.7% and a return on invested capital of 55.3%. The company also has a buyback yield of 1.0%, which ranks in the 77th percentile and is above the sector median of –1.9%.
The weakest component of the stock’s Quality Grade is its accruals-to-assets ratio of 0.6%, which ranks in the lowest 15th percentile of all stocks.
Cognizant Technology Solutions has a Value Grade of C, based on a score of 44, which is average. The company ranks in the cheapest 45th percentile for its enterprise-value-to-EBITDA ratio and in the 48th cheapest percentile for its price-earnings ratio. The company has an enterprise-value-to-EBITDA ratio of 11.2 and a price-earnings ratio of 17.6. A lower price-to-free-cash-flow ratio is also considered better value, and Cognizant Technology Solutions has a price-to-free-cash-flow ratio of 32.2. The price-to-sales ratio is 2.01, which ranks in the 53rd percentile.
The company has a Momentum Grade of C, based on its Momentum Score of 59. This means that the stock’s momentum is average in terms of its weighted relative price strength over the last four quarters. The quarterly ranks are 64, 52, 81 and 27, sequentially from the most recent quarter. The weighted four-quarter relative price strength is 1.5%.
Wipro Ltd. (WIT) is a global IT, consulting and business process services company operating through IT services and IT products segments. The IT services segment provides digital strategy advisory, customer-centric design, IT consulting, application development, reengineering, maintenance, systems integration, package implementation, cloud, infrastructure, business process services, mobility, analytics, research and development (R&D), and hardware and software design services. The IT products segment offers enterprise platforms, networking, software, data storage, contact center infrastructure, enterprise security, IT optimization, video solutions and end-user computing solutions. Wipro was founded in 1945 and is headquartered in Bengaluru, India.
Wipro has a Quality Grade of A, based on a score of 90, which is very strong. The company ranks strongly in terms of its buyback yield and F-Score. Its buyback yield of 2.5% ranks in the 84th percentile among all U.S.-listed stocks. Its F-Score of 7 ranks in the 83rd percentile. The F-Score is a number between 0 and 9 that assesses the strength of a company’s financial position. It considers the profitability, leverage, liquidity and operating efficiency of a company. Higher numbers are better.
The company’s Growth Grade is A, which is very strong. Wipro has realized positive annual cash from operations in the past five consecutive years. It also has a five-year annualized sales growth rate of 5.0%.
Earnings estimate revisions indicate whether analysts’ expectations for the firm’s profits have improved or worsened. Wipro has an Earnings Estimate Revisions Grade of B, based on a score of 76, which is positive. The grade is based on the statistical significance of its latest two quarterly earnings surprises and the increases in consensus earnings estimate for the current fiscal year over the past month and past three months.
Wipro reported a positive earnings surprise of 10.3% for its fiscal third quarter of 2025. For the prior quarter, it reported a positive earnings surprise of 5.9%. Over the last three months, the consensus earnings estimate for fiscal-year 2025 ending March 31 has been revised upward from $0.135 to $0.141 per share.
