It's been a great afternoon session for Infosys investors, who saw their shares rise 1.3% to a price of $15.83 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Infosys's Valuation Is in Line With Its Sector Averages:
Infosys Limited, together with its subsidiaries, provides consulting, technology, outsourcing, and next-generation digital services in North America, Europe, India, and internationally. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 27.16 and an average price to book (P/B) ratio of 6.23. In contrast, Infosys has a trailing 12 month P/E ratio of 22.3 and a P/B ratio of 14.28.
Infosys's PEG ratio is 1.39, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company Has a Positive Net Current Asset Value:
|Net Income (MM)||$2,331||$2,613||$2,963||$2,981|
|Net Interest Expense (MM)||-24||191||194||191|
|Net Interest Expense (MM)||-$24||$191||$194||$191|
|Depreciation & Amort. (MM)||-$407||-$441||-$466||-$524|
|Earnings Per Share||$0.55||$0.61||$0.7||$0.71|
|Diluted Shares (MM)||4,265||4,251||4,219||7,140|
|Free Cash Flow (MM)||$2,146||$2,973||$3,055||$2,534|
|Capital Expenditures (MM)||-$465||-$285||-$290||-$319|
|Net Current Assets (MM)||$3,653||$3,984||$3,304||$2,538|
|Net Debt / EBITDA||-0.52||-0.65||-0.34||-0.1|
Infosys benefits from a steady stream of strong cash flows, low leverage, and growing revenues and decreasing reinvestment in the business. The company's financial statements show average operating margins with a stable trend and positive EPS growth. However, the firm has slimmer gross margins than its peers. Finally, we note that Infosys has a decent current ratio.