Infosys Ltd

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INFY : NYSE : Technology
$14.74 -0.04 | -0.27%
Today's Range: 14.72 - 14.9
Avg. Daily Volume: 5240600.0
12/09/16 - 4:02 PM ET

Financial Analysis


INFOSYS LTD's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Sales and net income have grown, and although the growth in revenues has outpaced the average competitor within the industry, the net income growth has not. INFOSYS LTD is extremely liquid. Currently, the Quick Ratio is 3.55 which clearly shows the ability to cover any short-term cash needs. INFY managed to increase the liquidity from the same period a year ago, despite already having very strong liquidity to begin with. This would indicate improved cash flow.

During the same period, stockholders' equity ("net worth") has increased by 11.28% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)2587.02391.0
EBITDA ($mil)707.0665.0
EBIT ($mil)644.0610.0
Net Income ($mil)539.0519.0


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)5086.04655.0
Total Assets ($mil)11875.010810.0
Total Debt ($mil)0.00.0
Equity ($mil)9730.08743.0


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin39.0840.07
EBITDA Margin27.3227.81
Operating Margin24.8925.51
Sales Turnover0.840.83
Return on Assets17.7418.64
Return on Equity21.6523.04
Debt Q2 FY16 Q2 FY15
Current Ratio3.933.73
Debt/Capital0.00.0
Interest Expense0.00.0
Interest Coverage0.00.0


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)2285.652285.62
Div / share0.00.0
EPS0.240.23
Book value / share4.263.83
Institutional Own % n/a n/a
Avg Daily Volume5361426.04859965.0

Valuation


BUY. The current P/E ratio indicates a significant discount compared to an average of 26.60 for the IT Services industry and a discount compared to the S&P 500 average of 25.37. Conducting a second comparison, its price-to-book ratio of 3.37 indicates a premium versus the S&P 500 average of 2.81 and a significant discount versus the industry average of 7.86. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, INFOSYS LTD proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
INFY 15.59 Peers 26.60   INFY 16.06 Peers 19.28

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

INFY is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

INFY is trading at a discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
INFY 14.34 Peers 20.63   INFY 4.68 Peers 1.60

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

INFY is trading at a significant discount to its peers.

 

Premium. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

INFY trades at a significant premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
INFY 3.37 Peers 7.86   INFY 3.37 Peers 12.65

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

INFY is trading at a significant discount to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, INFY is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
INFY 3.30 Peers 5.05   INFY 10.17 Peers 16.45

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

INFY is trading at a significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

INFY significantly trails its peers on the basis of sales growth

 

 

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