Earnings Preview: Infosys Limited

| About: Infosys Limited, (INFY)

Infosys Limited (NASDAQ:INFY) provides business consulting, technology, engineering, and outsourcing services worldwide. Its solutions comprise business strategy consulting, systems integration, business requirements definition, business process re-engineering, business and technology solution design, package evaluation and implementation, program management, organizational design and change management, and upgrade and maintenance services.

It is scheduled to report its Q1 2013 results on July 12, 2012, before the market opens. In this article I will recap the historical results of the company, latest EPS estimates vs. surprises, latest developments and closest competitors' development.

Technical Overview


The stock has a market capitalization of $26.31B and is currently trading at $46.05 with a 52 week range of $41.40 - $68.52. The stock performance year to date: -9.06%. It is currently trading above 20and 50SMA, but below 200SMA.

Key Metrics

  • Trailing P/E: 15.35
  • Forward P/E: 13.91
  • Price/Sales: 3.71
  • Price/Book: 3.95
  • PEG Ratio: 1.01
  • Total Debt: 0.00
  • Annual dividend yield: 2.00%
  • Return on Equity: 27.03%
  • Return on Assets: 17.30%

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last four quarters. In the last quarter it reported $0.81 EPS, in-line with analyst estimates.

The consensus EPS is $0.73 based on 12 analysts' estimates, up from $0.67 a year ago. Revenue estimates are $1.78B, up from $1.67B a year ago. The median target price by analysts for the stock is $50.00.

Average recommendation: Overweight

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On April 15, 2012, the company was downgraded from Overweight to Neutral at HSBC Securities.
  • On January 16, 2012, the company was downgraded from Buy to Hold at Needham.

Latest Developments

  • On June 25, 2012, Infosys was honored with IR awards at the 2011 Thomson Reuters Awards and the 2012 Institutional Investors All-Asia Awards.
  • On June 14, 2012, Infosys Ltd announced a strategic business alliance with Resonant Software, a company with an underwriting and new business solution for the life insurance industry.
  • On June 14, 2012, Infosys Ltd announced that it has signed a Memorandum of Understanding (NASDAQ:MOU) with The State of Israel, to establish and enhance cooperation in industrial research and development.

Competitors

Infosys Ltd. operates in N/A industry. The company could be compared to Accenture plc (NYSE:ACN), Cognizant Technology Solutions Corporation (NASDAQ:CTSH), Genpact Ltd. (NYSE:G), and International Business Machines Corporation (NYSE:IBM). Below is the table comparison of the most important ratios between these companies and the industry.

Below is the chart comparison with the stock price changes as a percentage for the selected companies and S&P 500 index for the last one year period.

INFY ChartClick to enlarge

INFY data by YCharts

Competitors' Latest Development

  • On July 3, 2012, Sandvik AB announced that it has entered into a five year strategic agreement, to a value of 2 billion SEK, with International Business Machines Corp and will outsource parts of the IT infrastructure services.
  • On June 28, 2012, Accenture PLC announced that for the fourth quarter of 2012, it expects net revenues to be in the range of $6.60 billion to $6.85 billion. For fiscal 2012, it expects revenue growth to be in the range of 10% to 12% in local currency and updated and narrowed its range for diluted EPS to $3.80 to $3.84 from its previously guided range of $3.82 to $3.90. The Company reported revenues of $25.5 billion in fiscal 2011.
  • On June 27, 2012, Genpact Limited announced that it has been awarded a five-year contract extension with Momentive Performance Materials for order-to-cash (OTC) and collections services.
  • On June 27, 2012, Accenture PLC announced that it has been selected by the State of California, following a competitive bid process, to implement a statewide health insurance exchange, the California Healthcare Enrollment, Eligibility and Retention System (CalHEERS).
  • On June 27, 2012, International Business Machines Corp and Veolia Transdev announced that together they are developing a smarter mobility solution designed to help cities alleviate road congestion, optimize transportation infrastructures and improve the urban traveler experience.
  • On June 27, 2012, International Business Machines Corp and Lawrence Livermore National Laboratory (LLNL) announced that they are broadening their nearly 20-year collaboration in high performance computing (HPC) by joining forces to work with industrial partners to help boost their competitiveness in the global economy.
  • On June 25, 2012, Guardia Civil, the police force in Spain, has selected Accenture PLC to oversee the integration of 12 additional information sources, into the operations management system and police investigations system used by the force.
  • On June 14, 2012, Cognizant Technology Solutions Corp.announced that it has expanded its relationship with ING U.S. to offer a comprehensive array of insurance business process services.
  • On June 13, 2012, Accenture PLC announced that it has been selected by Wing Lung Bank, a wholly owned subsidiary of China Merchants Bank, to plan and oversee the implementation of its new core banking technology system as part of the bank's broad business transformation program.
  • On June 13, 2012, International Business Machines Corp announced that it has completed acquisition of Tealeaf Technology, Inc. Terms of the transaction were not disclosed.
  • On June 7, 2012, International Business Machines Corp announced that Sree Charan Souharda Cooperative Bank has selected IBM SmartCloud to help it meet growing demand, add new customer services and to centralize mission-critical operations such as real-time transaction processing across its five branches in Bangalore.
  • On June 6, 2012, The National Institutes of Health (NIH) has selected Accenture Plc's Accenture Federal Services as one of the prime contractors to provide technology services under a 10 year, $20 billion indefinite-delivery, indefinite-quantity (IDIQ) contract.
  • On June 5, 2012, The Government of India Department of Electronics and Information Technology (DeitY) announced that it has selected Accenture to review investment proposals from global technology providers and investors interested in building semiconductor fabrication units (fabs) in India.
  • On June 4, 2012, Accenture PLC announced that it has signed a five-year application development and maintenance services agreement with Nordea, the financial services group in the Nordic and Baltic Sea region.
  • On May 29, 2012, International Business Machines Corp announced it has completed the acquisition of Vivisimo, provider of federated discovery and navigation software that helps organizations access and analyze big data.
  • On May 23, 2012, International Business Machines Corp announced it has completed the acquisition of Varicent Software Incorporated, provider of analytics software for compensation and sales performance management.
  • On May 22, 2012, Genpact Limited announced that it has signed an agreement with Dr. Reddy's Laboratories to provide comprehensive finance and accounting (F&A) services.
  • On May 21, 2012, International Business Machines Corp announced that The U.S. General Services Administration has awarded a contract to the Company to develop and install advanced smart building technology in 50 of the federal government's highest energy-consuming buildings.
  • On May 7, 2012, International Business Machines Corp And Banco de Credito del Peru announced a five-year agreement for IT outsourcing services. The agreement will enable BCP to optimize its operational expenses, relying on IBM to provide IT infrastructure management services, including support, operation and maintenance of the bank's mainframe, midrange and storage platforms.
  • On May 2, 2012, International Business Machines Corp announced a definitive agreement to acquire Tealeaf Technology, Inc., a provider of customer experience analytics software that helps organizations to gain intelligence and react more swiftly to consumer trends in digitally transformed marketplace.
  • On April 27, 2012, International Business Machines Corp announced that The Sunan Kalijaga Islamic State University (UIN) Yogyakarta has adopted IBM's smarter computing approach to IT to improve the quality of the education process through highly collaborative learning services.
  • On April 25, 2012, International Business Machines Corp and Bauman Moscow State Technical University announced the opening of a Smarter Cities Development and Education Center in Russia - the first of its kind in the region.
  • On April 10, 2012, Accenture Plc announced that it has completed its acquisition of Neo Metrics Analytics S.L. a consulting firm specializing in optimization and predictive analytics based in Madrid, Spain.
  • On April 3, 2012, Accenture Plc announced that it will team with SAS Institute to implement the SAS Risk Management for Insurance solution group-wide at Folksam, one of Sweden's insurers, to help comply with the Solvency II directive's legal reporting requirements.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.