February 15, 2024
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	February 15, 2024
VALUE
VALUE	46
GROWTH
GROWTH	33
SAFETY
SAFETY	45
SENTIMENT
SENTIMENT	58
360° VIEW
360° VIEW	39

ANALYSIS: With an Obermatt 360° View of 39 (better than 39% 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 58, which means that professional investors are more optimistic about the stock than for 58% of alternative investment opportunities. But all other ranks are below average. The consolidated Value Rank has a rank of 46, 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 33, 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 33% of competitors in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 45 which means that the company has a riskier financing structure than 55% 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 39, Infosys is worse than 61% of all alternative stock investment opportunities based on the Obermatt Method. As only the professional market sentiment (Sentiment Rank of 58) 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	February 15, 2024
ANALYST OPINION
ANALYST OPINION	67
OPINIONS CHANGE
OPINIONS CHANGE	36
PRO HOLDINGS
PRO HOLDINGS	79
MARKET PULSE
MARKET PULSE	42
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	58

ANALYSIS: With an Obermatt Sentiment Rank of 58 (better than 58% 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 of the indicators below and the other half above average for Infosys. Analyst Opinions are at a rank of 67 (better than 67% of alternative investments). Currently, stock research analysts tend to recommend a stock investment in the company. There are also many institutional investors invested in the stock, represented by a Professional Investors rank of 79 which means that currently, professional investors hold more stock in this company than in 79% of alternative investment opportunities. But Analyst Opinions Change has a rank of 36, which means that stock research experts are changing their opinions for the worse in recommending investing in the company. In other words, they are getting more critical of investments in Infosys. Furthermore, Market Pulse has a rank of 42, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 58% of competitors). ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 58 (more positive than 58% compared with investment alternatives), Infosys has a reputation among professional investors that is above-average compared with that of its competitors. Three below-market sentiment indicators are a sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it may be around the corner. ...read more

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Value Strategy: Infosys Stock Price Value below-average critical

VALUE METRICS	February 15, 2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	36
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	46
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	22
DIVIDEND YIELD
DIVIDEND YIELD	75
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	46

ANALYSIS: With an Obermatt Value Rank of 46 (worse than 54% compared with alternatives), Infosys shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Infosys. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 75% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 36 which means that the stock price compared with what market professionals expect for future profits is higher than 64% of comparable companies, indicating a low value concerning Infosys's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 46 which means that the stock price compared with what market professionals expect for future profit levels is higher than 54% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 22 is also low. Compared with invested capital, the stock price is higher than for 78% of comparable investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 46, is a hold recommendation based on Infosys's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Infosys? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Infosys only if they reasonably expect the low current profit levels to be transitory. ...read more

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Growth Strategy: Infosys Growth Momentum low

GROWTH METRICS	February 15, 2024
REVENUE GROWTH
REVENUE GROWTH	29
PROFIT GROWTH
PROFIT GROWTH	23
CAPITAL GROWTH
CAPITAL GROWTH	67
STOCK RETURNS
STOCK RETURNS	47
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	33

ANALYSIS: With an Obermatt Growth Rank of 33 (better than 33% 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 67, which means that currently professionals expect the company to grow its invested capital more than 23% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 29 which means that currently professionals expect the company to grow less than 71% of its competitors. Profit Growth with a rank of 23 and Stock Returns with a rank of 47 are also low (below 53% of alternative investments). ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 33, 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	February 15, 2024
LEVERAGE
LEVERAGE	52
REFINANCING
REFINANCING	26
LIQUIDITY
LIQUIDITY	84
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	45

ANALYSIS: With an Obermatt Safety Rank of 45 (better than 45% 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 52, meaning the company has a below-average debt-to-equity ratio. It has less debt than 52% 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 26, 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 74% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 45 (worse than 55% 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 Lowest Financial Performance

COMBINED PERFORMANCE	February 15, 2024
VALUE
VALUE	46
GROWTH
GROWTH	33
SAFETY
SAFETY	84
COMBINED
COMBINED	22

ANALYSIS: With an Obermatt Combined Rank of 22 (worse than 78% compared with investment alternatives), Infosys (IT Consulting & oth. Services, India) shares have lower financial characteristics compared with similar stocks. Shares of Infosys are low in value (priced high) with a consolidated Value Rank of 46 (worse than 54% of alternatives), show below-average growth (Growth Rank of 33), and are riskily financed (Safety Rank of 45), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 22, is a sell 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 46), low growth (Obermatt Growth Rank of 33), and risky financing practices (Obermatt Safety Rank of 45), 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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