) hit a 52-week high of $55.80 during Friday's trading session.
However, the stock closed the session at $55.48, reflecting a
solid year-to-date return of 29.4%. The average trading volume
for the last three months aggregated 1,236,850 shares.
Infosys delivered positive earnings surprises in the last four
quarters with an average beat of 5.27%. This Zacks Rank #2 (Buy)
company has a market cap of $31.7 billion and a long-term
expected earnings growth rate of 13.4%.
Infosys has a strong balance sheet and generates a substantial
cash flow. In the last quarter the company reported a
strong top-line driven by higher revenues across its businesses
and regions. In addition, positive estimate revisions, strong
client additions especially from Fortune 500 companies and new
deal wins are some of the catalysts driving the stock.
On Oct 11, Infosys reported modest second-quarter 2014 results
with earnings declining 10.7% year over year primarily due to
negative currency impact. However the company's top-line rose
15.0% year over year and 3.8% sequentially.
The company witnessed volume growth, client additions, five
large deal wins and increased sales momentum in its big data and
cloud offerings. In addition, the company maintains a sound and
flexible balance sheet with ample liquidity that enables it to
capitalize on potential acquisition opportunities to fuel its
top-line growth. Infosys has a pristine balance sheet, with more
than $4.0 billion in cash & cash equivalents and no debt.
Driven by the strong top line growth in the second quarter,
management increased its revenue guidance for fiscal 2014.
Revenues are expected to increase in the range of 9% to 10%
against 6% to 10% mentioned earlier.
This apart, its co-founder Narayana Murthy who joined the
company in Jun 2013, outlined some strategies to bring the
company back on its profit making track. The initiatives set by
the Murthy primarily focus on winning large deals while
maintaining the market share. Second, he focused on addressing
the high costs of the company through a cost optimization
strategy. In addition, Murthy also emphasized improving employee
morale through efficient rewards.
Over the last 60 days, 7 out of 9 estimates for 2014 have been
revised upward while only one estimate was revised lower, which
led to a 2.1% rise in the Zacks Consensus Estimate to $2.96 per
share. For 2015, 9 out of 10 estimates moved upward, helping the
Zacks Consensus Estimate advance 5.2% to $3.24 per share
Other Stocks to Consider
Infosys currently has a short-term Zacks Rank #2 (Buy). Some
other similarly- placed stocks operating in the industry include
EPAM Systems, Inc.
CoStar Group Inc.
). All three stocks carry a Zacks Rank #2 (Buy).
COSTAR GRP INC (CSGP): Free Stock Analysis
AMDOCS LTD (DOX): Free Stock Analysis Report
EPAM SYSTEMS (EPAM): Free Stock Analysis
INFOSYS LTD (INFY): Free Stock Analysis
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