A prudent investment decision involves buying of stocks with solid prospects and selling those that carry a lot of risks. At times, it is rational to retain certain stocks that have enough potential but are weighed down by tough market conditions.
Here we focus on Infosys LimitedINFY , a stock with an expected long-term earnings per share growth rate of 9.95%. The metric is expected to register growth of 7.8% and 7.9% in 2019 and 2020, respectively.
The company's price performance over the past year looks impressive. Shares of Infosys have rallied 16.7% versus the industry 's decline of 12.1%.
Let's delve deeper and analyze the stock's prospects.
What's Driving the Stock?
Infosys is benefiting from growth across geographies and business segments. In the las t report ed quarter, adjusted earnings of 14 cents per share beat the Zacks Consensus Estimate by a penny. Revenues of $2.99 billion increased 8.4% year over year and surpassed the Zacks Consensus Estimate of $2.95 billion on the back of strong demand in digital services.
Higher spending on digital, analytics, cloud, cybersecurity and other new technology domains is a key driver for the company. It benefited from a strong performance within the banking, financial services and insurance (BFSI) verticals.
Large deal wins are a positive for the company. In the last reported quarter, it signed 14 big contracts with a total contract value (TCV) of more than $1.57 billion, mainly from financial services and manufacturing verticals. Higher investment in sales and focus on building a client-supportive portfolio are an upside.
The company added 101 clients, partly backed by the Fluido acquisition. Good news is that its number of $100 million-plus clients is now reportedly increased to 23 compared with 20 a year ago.
The aforementioned factors left a positive influence on Infosys' performance in the last reported quarter. In fact, the company's key metrics outperformed the Zacks Consensus Estimate in three of the trailing four reported quarters, matching it on one occasion. The average positive surprise is delivered at 4.92%.
Given robust demand for its core services and latest digital offerings, the company raised its revenue guidance for the current fiscal year. Revenues are expected to rise in the 8.5-9% range compared with the earlier projection of 6-8% at CC.
We believe, the upbeat results will continue in the forthcoming quarters, providing investors with enough reasons to keep the stock in their portfolio.
Infosys Limited Price and EPS Surprise
Zacks Rank and Stocks to Consider
Currently, Infosys has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Computer and Technology sector are Synopsys, Inc. SNPS , Cloudera CLDR and Verint Systems Inc. VRNT , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Long-term earnings growth rate for both Synopsys and Verint is projected to be 10% while the same for Cloudera stands at 8%.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.