Infosys Ltd Stock Upgraded (INFY)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Infosys (NYSE: INFY) has been upgraded by TheStreet Ratings from hold to buy. 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, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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 5.19, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to $483.00 million or 9.52% when compared to the same quarter last year. In addition, INFOSYS LTD has also vastly surpassed the industry average cash flow growth rate of -88.43%.
  • 40.10% 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, INFY's net profit margin of 22.71% compares favorably to the industry average.
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Infosys Limited provides business consulting, technology, engineering, and outsourcing services worldwide. The company has a P/E ratio of 17.7, equal to the S&P 500 P/E ratio of 17.7. Infosys has a market cap of $30.3 billion and is part of the technology sector and computer software & services industry. Shares are up 25.3% year to date as of the close of trading on Friday.

You can view the full Infosys Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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