It's been a great morning session for Infosys investors, who saw their shares rise 1.8% to a price of $16.81 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.
a Lower P/E Ratio Than Its Sector Average but Trades Above Its Graham Number:
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 35.0 and an average price to book (P/B) ratio of 7.92. In contrast, Infosys has a trailing 12 month P/E ratio of 23.7 and a P/B ratio of 6.59.
Infosys's PEG ratio is 1.45, 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.
Generally Positive Cash Flows but a Declining EPS Growth Trend:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $10,939 | $11,799 | $12,780 | $13,561 | $16,311 | $18,212 |
| Gross Margins | 36% | 35% | 33% | 35% | 33% | 30% |
| Net Margins | 23% | 19% | 18% | 19% | 18% | 16% |
| Net Income (M) | $2,486 | $2,200 | $2,338 | $2,623 | $2,968 | $2,983 |
| Diluted Shares (M) | 2,258 | 4,353 | 4,265 | 4,251 | 4,219 | 4,188 |
| Earnings Per Share | $1.1 | $0.51 | $0.55 | $0.62 | $0.7 | $0.71 |
| EPS Growth | n/a | -53.64% | 7.84% | 12.73% | 12.9% | 1.43% |
| Avg. Price | $8.24 | $9.66 | $10.96 | $19.88 | $20.98 | $16.81 |
| P/E Ratio | 14.98 | 18.94 | 19.93 | 32.06 | 29.97 | 23.68 |
| Free Cash Flow (M) | $2,257 | $2,262 | $2,611 | $3,258 | $3,345 | $2,853 |
| Current Ratio | 3.55 | 2.84 | 2.62 | 2.55 | 2.0 | 1.81 |
