December 14, 2023
Top 10 Stock Infosys Hold Recommendation

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For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).

360° View: Obermatt 360° View Infosys Hold

360 METRICS	December 14, 2023
VALUE
VALUE	49
GROWTH
GROWTH	41
SAFETY
SAFETY	49
SENTIMENT
SENTIMENT	61
360° VIEW
360° VIEW	38

ANALYSIS: With an Obermatt 360° View of 38 (better than 38% compared with alternatives), overall professional sentiment and financial characteristics for the stock Infosys are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Infosys. The consolidated Sentiment Rank has a good rank of 61, which means that professional investors are more optimistic about the stock than for 61% of alternative investment opportunities. But all other ranks are below average. The consolidated Value Rank has a rank of 49, which means that the share price of Infosys is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 41, meaning that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. This means that growth is lower than for 41% of competitors in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 49 which means that the company has a riskier financing structure than 51% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more

RECOMMENDATION: With a consolidated 360° View of 38, Infosys is worse than 62% of all alternative stock investment opportunities based on the Obermatt Method. As only the professional market sentiment (Sentiment Rank of 61) is above-average, and all other consolidated Obermatt Ranks are below peers, the stock investing proposition case is rather weak. The stock price is expensive for a company of this size in this industry, visible in the below-average Value Rank. Growth is below the competition based on the Growth Rank, and the company has more debt than other companies, according to the Safety Rank. So the question becomes: How important is the Sentiment Rank when all others are below average? When it comes to growth, the low rating might be justified if growth is expected in the future and not yet reflected in current performance. This is often the case for companies with intellectual property, such as technology and pharmaceutical companies. In the early phases, these companies are expensive compared with their size and may have a lot of debt on their books, as is the case here, as seen in the low Value and Safety Ranks. Future growth may be the strongest investment rationale in this case, which is only reflected by institutional investors' opinions. You pay more than the market average for this stock and invest in a rather debt-loaded enterprise, but it may be worth it if the future of Infosyṣ is bright. A small investment might be justified, but proceed with caution. ...read more

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Sentiment Strategy: Professional Market Sentiment for Infosys positive

SENTIMENT METRICS	December 14, 2023
ANALYST OPINION
ANALYST OPINION	49
OPINIONS CHANGE
OPINIONS CHANGE	49
PRO HOLDINGS
PRO HOLDINGS	77
MARKET PULSE
MARKET PULSE	44
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	61

ANALYSIS: With an Obermatt Sentiment Rank of 61 (better than 61% compared with alternatives), overall professional sentiment and engagement for the stock Infosys is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and the other half above average for Infosys. Analyst Opinions are at a rank of 49 (worse than 51% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 49, which means that stock research experts are getting more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 44, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 56% of competitors). On the upside, the Professional Investors rank is 77, which means that professional investors hold more stock in this company than in 77% of alternative investment opportunities. Pros tend to favor investing in this company. This could be due to a large company size, which could contribute to the higher share of professional investors in the company. If this is not the case, the low sentiment ranks are more challenging to explain. ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 61 (more positive than 61% compared with investment alternatives), Infosys has a reputation among professional investors that is above-average compared with that of its competitors. Should the company be on the smaller side, the presence of professional investors could be reassuring. That would make Infosys stock something like a hidden gem. Investors should make sure with further research that this is true, because all other sentiment indicators are negative which is a sign for caution. ...read more

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Value Strategy: Infosys Stock Price Value below-average critical

VALUE METRICS	December 14, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	42
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	51
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	26
DIVIDEND YIELD
DIVIDEND YIELD	73
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	49

ANALYSIS: With an Obermatt Value Rank of 49 (worse than 51% compared with alternatives), Infosys shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Infosys. Price-to-Profit (also referred to as price-earnings, P/E) is 51 which means that the stock price compared with what market professionals expect for future profits is lower than for 51% of comparable companies, indicating a good value concerning Infosys's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 26, which means that the stock price is lower as regards to invested capital than for 26% of comparable investments. On the other hand, Price-to-Sales is less favorable than 58% of alternatives (only 42% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 27% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 49, is a hold recommendation based on Infosys's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more

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Growth Strategy: Infosys Growth Momentum low

GROWTH METRICS	December 14, 2023
REVENUE GROWTH
REVENUE GROWTH	37
PROFIT GROWTH
PROFIT GROWTH	24
CAPITAL GROWTH
CAPITAL GROWTH	74
STOCK RETURNS
STOCK RETURNS	33
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	41

ANALYSIS: With an Obermatt Growth Rank of 41 (better than 41% compared with alternatives), Infosys shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Infosys. Only Capital Growth has a good rank of 74, which means that currently professionals expect the company to grow its invested capital more than 24% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 37 which means that currently professionals expect the company to grow less than 63% of its competitors. Profit Growth with a rank of 24 and Stock Returns with a rank of 33 are also low (below 67% of alternative investments). ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 41, is a hold recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for Infosys is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. ...read more

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Safety Strategy: Infosys Debt Financing Safety below-average

SAFETY METRICS	December 14, 2023
LEVERAGE
LEVERAGE	50
REFINANCING
REFINANCING	28
LIQUIDITY
LIQUIDITY	84
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	49

ANALYSIS: With an Obermatt Safety Rank of 49 (better than 49% compared with alternatives), the company Infosys has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Infosys is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Infosys. Leverage is at a rank of 50, meaning the company has a below-average debt-to-equity ratio. It has less debt than 50% of its competitors. Liquidity is also good at a rank of 84, meaning the company generates more profit to service its debt than 84% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 28, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 72% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 49 (worse than 51% compared with alternatives), Infosys has a financing structure that is riskier than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Infosys. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more

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Combined financial peformance: Infosys Below-Average Financial Performance

COMBINED PERFORMANCE	December 14, 2023
VALUE
VALUE	49
GROWTH
GROWTH	41
SAFETY
SAFETY	84
COMBINED
COMBINED	31

ANALYSIS: With an Obermatt Combined Rank of 31 (worse than 69% compared with investment alternatives), Infosys (IT Consulting & oth. Services, India) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Infosys are low in value (priced high) with a consolidated Value Rank of 49 (worse than 51% of alternatives), show below-average growth (Growth Rank of 41), and are riskily financed (Safety Rank of 49), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 31, is a hold recommendation based on Infosys's financial characteristics. As the company Infosys's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 49), low growth (Obermatt Growth Rank of 41), and risky financing practices (Obermatt Safety Rank of 49), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more

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