Is Infosys (INFY) Worth Investing In? Key Factors to Consider

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
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.