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Infosys (INFY) earnings preview: a dipping margin story

12:34 am ET, 12 Jul 2018

Infosys Limited (INFY) is expected to report earnings on July 13 before market open.  The report will be for the fiscal Quarter ending June 2018. Shares are trading at 19.15, down -0.98%.

What are the INFY earnings expectations?  What news will the market be watching out for?  

Infosys’ fourth-quarter results were in line with analysts' expectations. In what was a disruptive year from a board and management perspective, the firm’s overall financial performance wound up being fairly solid. However, the stock declined notably after the result, because of management’s new fiscal 2019 guidance, which called for a lower than historical range for its closely followed operating margin.

The company expects its operating margin to be 22%-24% for fiscal 2019, which continues a recent trend of management resetting market expectations for this metric. Strategically, the margin outlook reflects the firm’s need to focus on growing its digital business, reskill its workforce, and expand its localization efforts.  The digital and localization efforts are required to be a leading IT services provider in the future.

Infosys Limited has a mixed history of beating analysts’ earnings estimates.  In the past four quarters, the company: 

  • Beat analyst EPS estimates by 1 cent ($.24 actuals vs. $.23 forecast) in FQ1’18;
  • Beat analyst EPS estimates by 1 cent ($.25 actuals vs. $.24 forecast) in FQ2’18;
  • Delivered on the analyst EPS estimate ($.25 actuals vs. $.25 forecast) in FQ3’18;
  • Beat analyst EPS estimates by 1 cent ($.26 actuals vs. $.25 forecast) in FQ4’18.

For FQ1’19, EPS is expected to grow by 4% year-over-year to $.25, while revenue is expected to grow 8% year-over-year to $2.86 billion.  


Over the last month, Infosys Limited (INFY) returned +2.19%.

Infosys Limited (INFY) average analyst price target ($18.48) is -3.5% below its current price ($19.15).

For the latest price and information on Infosys Limited, please visit Finstead and search for "INFY price" or "INFY news".

Infosys is one of India’s most pre-eminent providers of IT services. However, the company has suffered from its slow-moving legacy past (smaller, more discretionary projects) and out-of-date go-to-market strategy, resulting in low revenue growth relative to peers, margin compression, leadership churn, and high employee attrition.  

To address these issues, Infosys has launched a number of initiatives to improve its performance. The company has some way to go before rectifying its position, but a number of signs are promising, with revenue growth, margins, client mining, and employee attrition improving. 

Infosys Limited (INFY) Stock Guide

Updated at: 3:47 pm ET, 12 Nov 2020

Before we start: if you're looking for INFY stock price, you can quickly find it out by visiting Finny and typing "INFY quote". If you're looking for a quick scoop on INFY stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "INFY". You'll get all this info in one place. Or you can just type "INFY news" to get the latest stock news.

Looking to buy or sell Infosys Limited (INFY)? Interested in getting the full scoop on INFY, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this INFY stock guide, we'll address key questions about INFY, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are INFY earnings?
2. When is INFY earnings date?
3. What is INFY dividend?
4. What is INFY dividend yield?
5. What is INFY stock forecast (i.e., prediction)?
6. INFY buy or sell? What is INFY Finny Score?
7. What are the reasons to buy INFY? Why should I buy INFY stock?
8. What are the reasons to sell INFY? Why should I sell INFY stock?
9. What are INFY key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are INFY earnings?

INFY trailing 12-month earnings per share (EPS) is $0.57.

2. When is INFY earnings date?

INFY earnings date is undefined.

3. What is INFY dividend?

INFY forward dividend is $0.33.

4. What is INFY dividend yield?

INFY forward dividend yield is 2.3%.

Analyst Predictions

5. What is INFY stock forecast (i.e., prediction)?

Based on INFY analyst price targets, INFY stock forecast is $17.32 (for a year from now). That means the average analyst price target for INFY stock is $17.32. The prediction is based on 15 analyst estimates.

The low price target for INFY is $14.00, while the high price target is $20.00.

INFY analyst rating is Hold.

Analysis

6. INFY buy or sell? What is INFY Finny Score?

#{finnyScore:90}Our quantitative analysis shows 9 reasons to buy and 1 reason to sell INFY, resulting in Finny Score of 90.

7. What are the reasons to buy INFY? Why should I buy INFY stock?

Here are the reasons to buy INFY stock:

  • Infosys has many long-standing client relationships, a well-managed global delivery model, and a comprehensive services portfolio.
  • Relatively new CEO Sikka could inspire a new direction for Infosys and improve the firm’s competitive position and operational performance.
  • Continental Europe’s increasing enthusiasm for offshore outsourcing could act as a growth opportunity, and Infosys’ acquisition of consultancy Lodestone could cement a good foothold in the region.
  • INFY quarterly revenue growth was 3.20%, higher than the industry and sector average revenue growth (1.76% and 0.53%, respectively). See INFY revenue growth chart.
  • INFY profitability is improving. The YoY profit margin change was 22.73 percentage points. See INFY profitability chart.
  • INFY forward dividend yield is 2.30%, higher than the industry (0.43%) and sector (0.23%) forward dividend yields. See INFY forward dividend chart.
  • INFY forward P/E ratio is 22.30, which is low compared to its industry peers’ P/E ratios. See INFY forward P/E ratio chart.
  • INFY Price/Sales ratio is 4.70, which is low compared to its industry peers’ P/S ratios. See INFY forward Price/Sales ratio chart.
  • INFY PEG ratio (P/E adjusted for growth) is 3.02, which is low compared to its industry peers’ PEG ratios. See INFY PEG chart.
  • INFY average analyst price target ($17.32) is above its current price ($15.06). See INFY price target chart.
  • INFY cash to debt ratio is 5.57, higher than the average industry (0.14) and sector (0.17) cash to debt ratio. See INFY cash to debt chart.
  • INFY Enterprise Value/Revenue multiple is 4.48, which is low compared to its industry peers’ Enterprise Value/Revenue multiples. See INFY Enterprise Value/Revenue chart.

8. What are the reasons to sell INFY? Why should I sell INFY stock?

Let's look at the reasons to sell INFY stock (i.e., the bear case):

  • Attrition is a concern the company needs to address. While measures have been taken to improve this metric like a recently instituted restricted stock unit (RSU) plan for upper management, more improvement is needed in order to enthuse its workforce.
  • A number of high-profile client-facing executive departures could negatively affect the firm’s standing with legacy clients.
  • Commodification of outsourcing services could significantly pressure revenue and margins (roughly 25% of the firm’s revenue is exposed to a high degree of commodification, according to management).
  • INFY short interest (days to cover the shorts) ratio is 4.29. The stock garners more short interest than the average industry, sector or S&P 500 stock. See INFY short interest ratio chart.

Key Stats

9. What are INFY key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for INFY:

Metrics INFY
Price $15.35
Average Price Target / Upside $17.32 / 12.87%
Average Analyst Rating Hold
Forward Dividend Yield 2.11%
Industry Information Technology Services
Sector Technology
Number of Employees 225,000
Market Cap $63.76B
Forward P/E Ratio 24.41
Price/Book Ratio 4.95
Revenue (TTM) $12.87B
YoY Quarterly Revenue Growth 3.20%
Profit Margin 18.86%

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