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TheStreet Open House

Why Infosys (INFY) Stock Is Falling Today

NEW YORK (TheStreet) -- Infosys (INFY) was falling 7.5% to $51.40 Tuesday after slightly missing analysts' estimates for revenue in the fiscal fourth quarter.

In the fiscal fourth quarter Infosys posted earnings of 85 cents a share, beating the consensus estimates of 79 cents a share by 6 cents. Revenue grew 7.7% from the year-ago quarter to $2.09 billion. Analysts surveyed by Thomson Reuters expected revenue of $2.11 billion for the quarter.

Looking to fiscal 2015, which ends March 31, 2015, Infosys expects revenue to grow between 7% and 9%. That would result in revenue of between $8.826 billion and $8.991 billion. Analysts' estimates call for $9.06 billion for the year.

Must read: Warren Buffett's 10 Favorite Growth Stocks

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TheStreet Ratings team rates INFOSYS LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate INFOSYS LTD (INFY) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 20.1%. Since the same quarter one year prior, revenues slightly increased by 9.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • INFY has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.23, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 6.7% when compared to the same quarter one year prior, going from $434.00 million to $463.00 million.
  • 39.29% is the gross profit margin for INFOSYS LTD which we consider to be strong. Regardless of INFY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 22.04% trails the industry average.
  • You can view the full analysis from the report here: INFY Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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