Infosys rebounding, now looking for takeover candidates


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Emerging Money recently advised that Infosys Ltd ( INFY , quote ) was likely to recover from disappointing earnings . It has, with a 10.16% rise for the last month of market action.

[caption id="attachment_66526" align="alignright" width="300" caption="Infosys campus in Bangalore"] Image Courtesy Ashwin Kumar: [/caption]

Infosys, based in India,

"...defines, designs, and delivers information technology enabled business solutions. The company, together with its subsidiaries, provides various services, including business consulting, package enabled consulting and implementation, custom application development, maintenance and production support, technology consulting, business process management and solutions, product engineering solutions, infrastructure maintenance services, validation solutions, and systems integration services. It also develops, markets, and licenses banking products and solutions, such as Finacle suite, a Web-enabled solution that addresses banks core banking, treasury, wealth management, consumer and corporate e-banking, mobile banking, Islamic banking, and Web-based cash management requirements. In addition, the company provides business process management services, such as offsite customer relationship management, finance and accounting, and administration and sales order processing."

Not only has Infosys rebounded, it is on the prowl for acquisitions , which is a sign of strength. Infosys has a very strong balance sheet to finance any takeovers. A 24.71% profit margin has resulted in plenty of cash to buy other companies.

Earnings-per-share growth is on a very positive trend, with the yearly growth rate higher than the quarterly growth rate. The rate projected for the next five years is higher than both which is very positive for shareholders.

Also positive for shareholders is a return-on-equity of 28.50%. A return-on-equity of 15% is considered to be average. The profit margin and return-on-equity for Infosys compare favorable with those of Apple ( AAPL , quote ). Like Apple, Infosys also provides dividend income to its shareholders. The low dividend payout ratio allows for ample cash flow to increase the yield or initiate stock repurchase programs to reward shareholders.

Now trading around $45.66, the mean analyst target price for Infosys over the next year is $46.04. The 52-week high is $60.59.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks

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