Infosys Ltd Valuation – June 2018 $INFY

Company Profile (excerpt from Reuters): Infosys Limited, incorporated on July 2, 1981, is engaged in consulting, technology, outsourcing and next-generation services. The Company, along with its subsidiaries, provides business information technology (IT) services comprising application development and maintenance, independent validation, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management; consulting and systems integration services comprising consulting, enterprise solutions, systems integration and advanced technologies; products, business platforms and solutions to accelerate intellectual property-led innovation, including Finacle, its banking solution, and offerings in the areas of Analytics, Cloud and Digital Transformation. The Company’s segments are Financial Services and Insurance (FSI), Manufacturing and Hi-tech (MFG & Hi-TECH), Energy & utilities, Communication and Services (ECS), Retail, Consumer packaged goods and Logistics (RCL), and Life Sciences and Healthcare (LSH). The Company operates in North America, Europe, India and Rest of the World.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of INFY – June 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,843,573,514,131 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.55 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 53.03% Pass
6. Moderate PEmg Ratio PEmg < 20 19.63 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.24 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.55 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.99
MG Growth Estimate 3.72%
MG Value $15.78
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $14.36
MG Value based on 0% Growth $8.42
Market Implied Growth Rate 5.56%
Current Price $19.43
% of Intrinsic Value 123.15%

Infosys Ltd ADR qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.79 in 2015 to an estimated $0.99 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.56% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Infosys Ltd ADR revealed the company was trading above its Graham Number of $10.1. The company pays a dividend of $0.43 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.63, which was below the industry average of 44.18, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $2.47.

Infosys Ltd ADR performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $2.47
Graham Number $10.10
PEmg 19.63
Current Ratio 3.55
PB Ratio 4.24
Current Dividend $0.43
Dividend Yield 2.22%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $7,673,000,000
Total Current Liabilities $2,164,000,000
Long-Term Debt $0
Total Assets $12,255,000,000
Intangible Assets $377,000,000
Total Liabilities $2,295,000,000
Shares Outstanding (Diluted Average) 2,174,809,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.99
Mar2018 $1.10
Mar2017 $0.94
Mar2016 $0.90
Mar2015 $0.88
Mar2014 $0.77
Mar2013 $0.76
Mar2012 $0.75
Mar2011 $0.66
Mar2010 $0.58
Mar2009 $0.56
Mar2008 $0.51
Mar2007 $0.38
Mar2006 $0.25
Mar2005 $0.19
Mar2004 $0.13
Mar2003 $0.09
Mar2002 $0.08
Mar2001 $0.06
Mar2000 $0.03
Mar1999 $0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.99
Mar2018 $0.97
Mar2017 $0.88
Mar2016 $0.84
Mar2015 $0.79
Mar2014 $0.73
Mar2013 $0.70
Mar2012 $0.65
Mar2011 $0.58
Mar2010 $0.51
Mar2009 $0.44
Mar2008 $0.35
Mar2007 $0.25
Mar2006 $0.18
Mar2005 $0.13
Mar2004 $0.09
Mar2003 $0.07

Recommended Reading:

Other ModernGraham posts about the company

Infosys Ltd Valuation – July 2016 $INFY
Infosys Ltd Valuation – January 2016 Update $INFY
Infosys Limited Analysis – October 2015 Update $INFY
The 8 Best Stocks For Value Investors This Week – 6/27/15
Infosys Analysis – June 2015 Update $INFY

Other ModernGraham posts about related companies

Verisign Inc Valuation – May 2018 $VRSN
Motorola Solutions Inc Valuation – May 2018 $MSI
Leidos Holdings Inc Valuation – April 2018 $LDOS
Gartner Inc Valuation – March 2018 $IT
Cognizant Technology Solutions Corp – March 2018 $CTSH
International Business Machines Corp Valuation – February 2018 $IBM
Viavi Solutions Inc Valuation – Initial Coverage $VIAV
Equinix Inc Valuation – July 2017 $EQIX
Liquidity Services Inc Valuation – Initial Coverage $LQDT
LivePerson Inc Valuation – Initial Coverage $LPSN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Infosys Ltd Valuation – July 2016 $INFY

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – June 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Infosys Ltd (INFY) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Infosys Limited is engaged in consulting, technology, outsourcing and next-generation services. The Company, along with its subsidiaries, provides business information technology services comprising application development and maintenance, independent validation, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management; consulting and systems integration services comprising consulting, enterprise solutions, systems integration and advanced technologies; products, business platforms and solutions to accelerate intellectual property-led innovation, including Finacle, its banking solution, and offerings in the areas of Analytics, Cloud and Digital Transformation. Its segments are Financial Services and Insurance (FSI), Manufacturing and Hi-tech (MFG & Hi-TECH), Energy & utilities, Communication and Services (ECS), Retail, Consumer packaged goods and Logistics (RCL), and Life Sciences and Healthcare (LSH).

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of INFY – July 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $39,835,973,504 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.90 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 64.94% Pass
6. Moderate PEmg Ratio PEmg < 20 20.39 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.39 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

INFY value chart July 2016

EPSmg $0.88
MG Growth Estimate 3.91%
MG Value $14.33
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $12.74
MG Value based on 0% Growth $7.47
Market Implied Growth Rate 5.95%
Current Price $17.91
% of Intrinsic Value 125.00%

Infosys Ltd ADR is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.7 in 2013 to an estimated $0.88 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.95% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Infosys Ltd ADR receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

INFY charts July 2016

Net Current Asset Value (NCAV) $2.51
Graham Number $9.22
PEmg 20.39
Current Ratio 3.90
PB Ratio 4.39
Current Dividend $0.39
Dividend Yield 2.15%
Number of Consecutive Years of Dividend Growth 4

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $7,802,000,000
Total Current Liabilities $1,998,000,000
Long-Term Debt $0
Total Assets $11,378,000,000
Intangible Assets $717,000,000
Total Liabilities $2,054,000,000
Shares Outstanding (Diluted Average) 2,285,719,000

Earnings Per Share History

Next Fiscal Year Estimate $0.93
Mar2016 $0.90
Mar2015 $0.88
Mar2014 $0.77
Mar2013 $0.76
Mar2012 $0.75
Mar2011 $0.66
Mar2010 $0.58
Mar2009 $0.56
Mar2008 $0.51
Mar2007 $0.38
Mar2006 $0.25
Mar2005 $0.19
Mar2004 $0.13
Mar2003 $0.09
Mar2002 $0.08
Mar2001 $0.06
Mar2000 $0.03
Mar1999 $0.01

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.88
Mar2016 $0.84
Mar2015 $0.79
Mar2014 $0.73
Mar2013 $0.70
Mar2012 $0.65
Mar2011 $0.58
Mar2010 $0.51
Mar2009 $0.44
Mar2008 $0.35
Mar2007 $0.25
Mar2006 $0.18
Mar2005 $0.13
Mar2004 $0.09
Mar2003 $0.07
Mar2002 $0.05
Mar2001 $0.03

Recommended Reading:

Other ModernGraham posts about the company

Infosys Ltd Valuation – January 2016 Update $INFY
Infosys Limited Analysis – October 2015 Update $INFY
The 8 Best Stocks For Value Investors This Week – 6/27/15
Infosys Analysis – June 2015 Update $INFY
24 Companies in the Spotlight This Week – 3/28/15

Other ModernGraham posts about related companies

Cognizant Technology Solutions Corp Valuation – July 2016 $CTSH
Total System Services Inc Valuation – May 2016 $TSS
Qualcomm Inc Valuation – February 2016 $QCOM
Motorola Solutions Inc Valuation – February 2016 Update $MSI
Cognizant Technology Solutions Corp Valuation – January 2016 Update $CTSH
Akamai Technologies Inc Valuation – January 2016 $AKAM
Infosys Ltd Valuation – January 2016 Update $INFY
Motorola Solutions Inc Valuation – February 2016 Update $MSI
Cognizant Technology Solutions Corp Valuation – January 2016 Update $CTSH
Akamai Technologies Inc Valuation – January 2016 $AKAM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Infosys Ltd Valuation – January 2016 Update $INFY

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Infosys Ltd (INFY) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Infosys Limited is engaged in consulting, technology, outsourcing and next-generation services. The Company’s solutions include application development and maintenance, independent validation services, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management; Management Consulting, enterprise solutions and package implementation, systems integration and business intelligence; Products, business platforms and solutions, and technologies, such as cloud computing, enterprise mobility, digital, big data and analytics. Its segments are Financial Services and Insurance, Manufacturing, Energy and utilities, Communication and Services, Retail, Consumer packaged goods and Logistics, Life Sciences and Healthcare, and Growth Markets.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of INFY – January 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $37,098,608,972 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.73 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 60.37% Pass
6. Moderate PEmg Ratio PEmg < 20 21.40 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 42.72 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.73 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

INFY value Chart January 2016

EPSmg $0.76
MG Growth Estimate 2.53%
MG Value $10.26
Opinion Overvalued
MG Value based on 3% Growth $10.98
MG Value based on 0% Growth $6.43
Market Implied Growth Rate 6.45%
Current Price $16.20
% of Intrinsic Value 157.88%

Infosys Ltd qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the high PEmg and PB ratios.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.65 in 2012 to an estimated $0.76 for 2016.  This level of demonstrated earnings growth does not support the market’s implied estimate of 6.45% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Infosys Ltd (INFY)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

INFY Charts January 2016

Net Current Asset Value (NCAV) $0.23
Graham Number $2.38
PEmg 21.40
Current Ratio 3.73
PB Ratio 42.72
Dividend Yield 2.17%
Number of Consecutive Years of Dividend Growth 8

 

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep15
Total Current Assets $741,747,700
Total Current Liabilities $198,846,200
Long-Term Debt $0
Total Assets $1,071,627,000
Intangible Assets $69,294,680
Total Liabilities $204,952,000
Shares Outstanding (Diluted Average) 2,285,713,000

Earnings Per Share History

Next Fiscal Year Estimate $0.66
Mar15 $0.88
Mar14 $0.75
Mar13 $0.75
Mar12 $0.76
Mar11 $0.65
Mar10 $0.57
Mar09 $0.56
Mar08 $0.50
Mar07 $0.37
Mar06 $0.25
Mar05 $0.19
Mar04 $0.24
Mar03 $0.18
Mar02 $0.16
Mar01 $0.12
Mar00 $0.06
Mar99 $0.02

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.76
Mar15 $0.79
Mar14 $0.73
Mar13 $0.70
Mar12 $0.65
Mar11 $0.57
Mar10 $0.51
Mar09 $0.44
Mar08 $0.36
Mar07 $0.27
Mar06 $0.22
Mar05 $0.19
Mar04 $0.18
Mar03 $0.14
Mar02 $0.10
Mar01 $0.06
Mar00 $0.02

Recommended Reading:

Other ModernGraham posts about the company

Infosys Limited Analysis – October 2015 Update $INFY
The 8 Best Stocks For Value Investors This Week – 6/27/15
Infosys Analysis – June 2015 Update $INFY
24 Companies in the Spotlight This Week – 3/28/15
Infosys Limited Quarterly Valuation – March 2015 $INFY

Other ModernGraham posts about related companies

Total System Services Inc. Valuation – November 2015 Update $TSS
International Business Machines Corp Valuation – November 2015 Update $IBM
Motorola Solutions Inc. Valuation – November 2015 Update $MSI
Qualcomm Inc. Valuation – October 2015 Update $QCOM
Cognizant Technology Solutions Corp Analysis – October 2015 Update $CTSH
Infosys Limited Analysis – October 2015 Update $INFY
Teradata Corporation Analysis – September 2015 Update $TDC
Akamai Technologies Inc. Analysis – August 2015 Update $AKAM
Total System Services Inc. Analysis – August 2015 Update $TSS
Acxiom Corporation Analysis – Initial Coverage $ACXM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Infosys Limited Analysis – October 2015 Update $INFY

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – September 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Infosys Limited Analysis (INFY) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Infosys Limited is engaged in consulting, technology, outsourcing and next-generation services. The Company’s solutions include application development and maintenance, independent validation services, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management; Management Consulting, enterprise solutions and package implementation, systems integration and business intelligence; Products, business platforms and solutions, and technologies, such as cloud computing, enterprise mobility, digital, big data and analytics. Its segments are Financial Services and Insurance, Manufacturing, Energy and utilities, Communication and Services, Retail, Consumer packaged goods and Logistics, Life Sciences and Healthcare, and Growth Markets.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of INFY

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $38,699,309,992 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.54 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 72.90% Pass
6. Moderate PEmg Ratio PEmg < 20 22.99 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.10 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.54 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

INFY value chart October 2015

EPSmg $0.82
MG Growth Estimate 4.01%
MG Value $13.57
Opinion Overvalued
MG Value based on 3% Growth $11.91
MG Value based on 0% Growth $6.98
Market Implied Growth Rate 7.24%
Current Price $18.89
% of Intrinsic Value 139.19%

Infosys Limited qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned by the high PEmg and PB ratios, while the Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.65 in 2012 to an estimated $0.82 for 2016.  This level of demonstrated earnings growth does not support the market’s implied estimate of 7.24% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Infosys Limited (INFY)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

INFY charts October 2015

Net Current Asset Value (NCAV) $2.26
Graham Number $8.41
PEmg 22.99
Current Ratio 3.54
PB Ratio 5.10
Dividend Yield 1.88%
Number of Consecutive Years of Dividend Growth 3

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $7,294,000,000
Total Current Liabilities $2,062,000,000
Long-Term Debt $0
Total Assets $10,587,000,000
Intangible Assets $720,000,000
Total Liabilities $2,125,000,000
Shares Outstanding (Diluted Average) 2,285,672,000

Earnings Per Share History

Next Fiscal Year Estimate $0.85
Mar15 $0.88
Mar14 $0.77
Mar13 $0.76
Mar12 $0.75
Mar11 $0.66
Mar10 $0.58
Mar09 $0.56
Mar08 $0.51
Mar07 $0.38
Mar06 $0.25
Mar05 $0.19
Mar04 $0.25
Mar03 $0.18
Mar02 $0.16
Mar01 $0.12
Mar00 $0.06
Mar99 $0.01

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.82
Mar15 $0.79
Mar14 $0.73
Mar13 $0.70
Mar12 $0.65
Mar11 $0.58
Mar10 $0.51
Mar09 $0.44
Mar08 $0.36
Mar07 $0.28
Mar06 $0.22
Mar05 $0.20
Mar04 $0.18
Mar03 $0.14
Mar02 $0.10
Mar01 $0.06
Mar00 $0.02

Recommended Reading:

Other ModernGraham posts about the company

The 8 Best Stocks For Value Investors This Week – 6/27/15
Infosys Analysis – June 2015 Update $INFY
24 Companies in the Spotlight This Week – 3/28/15
Infosys Limited Quarterly Valuation – March 2015 $INFY
27 Companies in the Spotlight This Week – 12/20/14

Other ModernGraham posts about related companies

Teradata Corporation Analysis – September 2015 Update $TDC
Akamai Technologies Inc. Analysis – August 2015 Update $AKAM
Total System Services Inc. Analysis – August 2015 Update $TSS
Acxiom Corporation Analysis – Initial Coverage $ACXM
ACI Worldwide Inc. Analysis – Initial Coverage $ACIW
Motorola Solutions Inc. Analysis – July 2015 Update $MSI
Qualcomm Inc. Analysis – July 2015 Update $QCOM
Cognizant Technology Solutions Corp Analysis – July 2015 Update $CTSH
Equinix Inc. Analysis – Initial Coverage $EQIX
Infosys Analysis – June 2015 Update $INFY

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Infosys Analysis – June 2015 Update $INFY

500px-Infosys_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – June 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Infosys (INFY) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Infosys Limited (Infosys) is a services company that provides business consulting, technology, engineering and outsourcing services. The Company also offers products, platforms and solutions to clients in different industries. Its business solutions include business IT services, consulting and systems integration services, products, business platforms and solutions, and cloud computing and enterprise mobility. Business IT services comprise application development and maintenance, independent validation services, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management. Consulting and systems integration services include consulting, enterprise solutions, systems integration and advanced technologies. Products, business platforms and solutions include Finacle, the company’s banking product.
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Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $16.15
MG Value $15.59
MG Opinion Fairly Valued
Value Based on 3% Growth $11.48
Value Based on 0% Growth $6.73
Market Implied Growth Rate 5.95%
Net Current Asset Value (NCAV) $4.99
PEmg 20.39
Current Ratio 4.15
PB Ratio 2.11

Balance Sheet – April 2015

Current Assets $7,551,000,000
Current Liabilities $1,820,000,000
Total Debt $0
Total Assets $10,615,000,000
Intangible Assets $597,000,000
Total Liabilities $1,853,000,000
Outstanding Shares 1,142,800,000

Earnings Per Share

2015 $0.88
2014 $0.77
2013 $0.76
2012 $0.75
2011 $0.66
2010 $0.58
2009 $0.57
2008 $0.51
2007 $0.38
2006 $0.25
2005 $0.19

Earnings Per Share – ModernGraham

2015 $0.79
2014 $0.73
2013 $0.70
2012 $0.65
2011 $0.58
2010 $0.51

Dividend History

Conclusion:

Infosys qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor is only concerned with the high PEmg ratio.  The Enterprising Investor has no initial concerns.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with the evaluation.  As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $0.58 in 2011 to $0.79 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 5.95% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Infosys (INFY)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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Infosys Limited Quarterly Valuation – March 2015 $INFY

500px-Infosys_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – March 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Infosys Limited (INFY) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Infosys Limited (Infosys) is a services company that provides business consulting, technology, engineering and outsourcing services. The Company also offers products, platforms and solutions to clients in different industries. Its business solutions include business IT services, consulting and systems integration services, products, business platforms and solutions, and cloud computing and enterprise mobility. Business IT services comprise application development and maintenance, independent validation services, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management. Consulting and systems integration services include consulting, enterprise solutions, systems integration and advanced technologies. Products, business platforms and solutions include Finacle, the company’s banking product.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $35.85
MG Value $30.97
MG Opinion Overvalued
Value Based on 3% Growth $22.92
Value Based on 0% Growth $13.44
Market Implied Growth Rate 7.09%
Net Current Asset Value (NCAV) $5.12
PEmg 22.68
Current Ratio 4.27
PB Ratio 4.99

Balance Sheet – December 2014

Current Assets $7,664,000,000
Current Liabilities $1,795,000,000
Total Debt $0
Total Assets $10,028,000,000
Intangible Assets $375,000,000
Total Liabilities $1,813,000,000
Outstanding Shares 1,142,800,000

Earnings Per Share

2015 (estimate) $1.75
2014 $1.53
2013 $1.51
2012 $1.50
2011 $1.31
2010 $1.15
2009 $1.13
2008 $1.01
2007 $0.75
2006 $0.50
2005 $0.38

Earnings Per Share – ModernGraham

2015 (estimate) $1.58
2014 $1.46
2013 $1.39
2012 $1.30
2011 $1.15
2010 $1.02

Dividend History

Conclusion:

Infosys Limited is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the high PEmg and PB ratios, while the Enterprising Investor has no initial concerns.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.15 in 2011 to only an estimated $1.58 for 2015.  This level of demonstrated growth does not support the market’s implied estimate of 7.09% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Infosys Limited (INFY) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Infosys Limited (INFY)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Infosys Limited (INFY) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Infosys Limited Quarterly Valuation – December 2014 $INFY

500px-Infosys_logo.svg

Infosys should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios, while the Enterprising Investor has no initial concerns about the company. Therefore, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $1.15 in 2011 to an estimated $1.57 for 2015. This is very strong and an impressive level of demonstrated growth which is in line with the market’s implied estimate for earnings growth of 5.75% over the next 7-10 years. In fact, actual historical growth is about 7.16% per year, so the market has priced in a slight earnings drop to a more sustainable level over the long term. The ModernGraham valuation model therefore returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.

Be sure to check out previous ModernGraham valuations of Infosys Limited for a greater perspective!

Read the full valuation on Seeking Alpha!

INFY Chart

INFY data by YCharts

Disclaimer:  The author did not hold a position in Infosys Limited (INFY) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Infosys Limited Quarterly Stock Valuation – September 2014 $INFY

500px-Infosys_logo.svgInfosys Limited is suitable for both the Defensive Investor and the Enterprising Investor. The Defensive Investor’s only concern is the high PB ratio and the Enterprising Investor has no initial concerns. As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with research into the company and comparing it to other opportunities. From a valuation perspective, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.30 in 2011 to an estimated $3.09 for 2015. This level of demonstrated growth does not support the market’s implied estimate of 5.40% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.

Read the full valuation on Seeking Alpha!

INFY Chart

INFY data by YCharts

Infosys Limited Quarterly Valuation – June 2014 $INFY

500px-Infosys_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Enterprising Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Infosys Limited (INFY) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Infosys Limited (Infosys) provides business consulting, technology, engineering and outsourcing services. Its end-to-end business solutions include consulting and systems integration comprising consulting, enterprise solutions, systems integration and advanced technologies; business information technology (IT) services consisting application development and maintenance, independent validation services, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management; products, business platforms and solutions, including Finacle. In November 2013, the Company announced that Infosys BPO, the business process outsourcing subsidiary announced the opening of a new delivery center in Eindhoven, the Netherlands.

INFY Chart

INFY data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $53.59
MG Value $63.50
MG Opinion Fairly Valued
Value Based on 3% Growth $42.46
Value Based on 0% Growth $24.89
Market Implied Growth Rate 4.90%
Net Current Asset Value (NCAV) $9.78
PEmg 18.30
Current Ratio 4.71
PB Ratio 3.86

Balance Sheet – 3/31/2014

Current Assets $7,180,000,000
Current Liabilities $1,524,000,000
Total Debt $0
Total Assets $9,522,000,000
Intangible Assets $417,000,000
Total Liabilities $1,589,000,000
Outstanding Shares 571,400,000

Earnings Per Share

2014 $3.06
2013 $3.02
2012 $3.00
2011 $2.62
2010 $2.30
2009 $2.24
2008 $2.02
2007 $1.50
2006 $0.99
2005 $0.77
2004 $1.01

Earnings Per Share – ModernGraham

2014 $2.93
2013 $2.79
2012 $2.59
2011 $2.30
2010 $2.03
2009 $1.77

Dividend History

INFY Dividend Chart

INFY Dividend data by YCharts

Conclusion:

Infosys Limited qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor’s only concern is with the high PB ratio, while the company passes all of the Enterprising Investor’s requirements.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities through a review of ModernGraham’s valuation of International Business Machines (IBM) and ModernGraham’s valuation of Oracle Corp. (ORCL).  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.03 in 2010 to $2.93 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 4.90% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value that falls within a margin of safety relative to the current price.

Be sure to review the previous ModernGraham Valuations of Infosys Limited (INFY)!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Infosys Limited (INFY)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Infosys Limited (INFY) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from wikipedia; this article is not affiliated with the company in any manner.

Infosys Ltd (INFY) Quarterly Valuation – March 2014

500px-Infosys_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Infosys fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Infosys Limited (Infosys) provides business consulting, technology, engineering and outsourcing services. Its end-to-end business solutions include consulting and systems integration comprising consulting, enterprise solutions, systems integration and advanced technologies; business information technology (IT) services consisting application development and maintenance, independent validation services, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management; products, business platforms and solutions, including Finacle. In November 2013, the Company announced that Infosys BPO, the business process outsourcing subsidiary announced the opening of a new delivery center in Eindhoven, the Netherlands.

INFY Chart

INFY data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $54.95
MG Value $63.06
MG Opinion Fairly Valued
Value Based on 3% Growth $42.36
Value Based on 0% Growth $24.83
Market Implied Growth Rate 5.15%
Net Current Asset Value (NCAV) $8.81
PEmg 18.81
Current Ratio 4.53
PB Ratio 4.34

Balance Sheet – 12/31/2013

Current Assets $6,534,000,000
Current Liabilities $1,442,000,000
Total Debt $0
Total Assets $8,733,000,000
Intangible Assets $414,000,000
Total Liabilities $1,502,000,000
Outstanding Shares 571,400,000

Earnings Per Share

2014 (estimate) $3.04
2013 $3.02
2012 $3.00
2011 $2.62
2010 $2.30
2009 $2.24
2008 $2.02
2007 $1.50
2006 $0.99
2005 $0.77
2004 $1.01
2003 $0.37

Earnings Per Share – ModernGraham

2014 (estimate) $2.92
2013 $2.79
2012 $2.59
2011 $2.30
2010 $2.03
2009 $1.77

Dividend History

INFY Dividend Chart

INFY Dividend data by YCharts

Conclusion:

Infosys is a very strong company that is intriguing to both the Defensive Investor and the Enterprising Investor.  The only requirement the company does not satisfy for either investor type is the Defensive Investor’s PB ratio requirement.  As a result, value investors seeking to follow the ModernGraham approach based on Benjamin Graham’s methods should keep the company on a watch list and feel very comfortable proceeding with further research, including a review of ModernGraham’s valuation of International Business Machines (IBM) and ModernGraham’s valuation of Oracle Corp (ORCL).  From a valuation perspective, the company appears to be fairly valued by the market after growing its EPSmg (normalized earnings) from $2.03 in 2010 to an estimated $2.92 for 2014.  This level of demonstrated historical growth supports the market’s implied estimate of 5.15% expected earnings growth, and leads the ModernGraham valuation model to return an estimate of intrinsic value that falls within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Infosys Ltd (INFY)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Infosys Ltd (INFY) or any of the other companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from the Wikipedia; this article is not affiliated with the company in any manner.

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