Once upon a time, in a land not far away, ruled by the good king Gerald Ford, a nation mobilized to "Whip Inflation Now." As investors gear up to learn how Indian outsourcer Wipro's
What analysts say:
- Buy, sell, or waffle? A whopping 29 analysts follow this stock, giving it 17 buy ratings, seven holds, and five sells.
- Revenue. On average, they expect sales to rocket 43% to $1.1 billion.
- Earnings. Meanwhile, profits are predicted to rise "only" 18% to $0.13 per share.
What management says:
Much as rival Infosys
And apparently, in America, too. In August, Wipro announced a $600 million buyout of Infocrossing, a New Jersey-based outsourcer that in fiscal 2007 booked $232.4 million in revenue, earning $9.3 million.
What management does:
Also much like with Infosys, the rupee ruckus seems more sound than fury at Wipro. The appreciating rupee / devaluing dollar may be crimping growth somewhat, but the firm's margins are holding up just fine. Gross margins are down just a little more than one percentage point in the past year; operating margins are down a bit more, net margins a bit less. On an operating basis, Wipro remains on par with Satyam
3/06 |
6/06 |
9/06 |
12/06 |
3/07 |
6/07 |
|
---|---|---|---|---|---|---|
Gross |
32.5% |
32.3% |
32.3% |
31.6% |
31.6% |
31.2% |
Operating |
21.0% |
21.0% |
21.2% |
20.5% |
20.1% |
19.6% |
Net |
19.1% |
19.3% |
19.6% |
19.4% |
19.5% |
18.8% |
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
Before we close today, let's take another look at that Infocrossing deal, shall we? At first glance, it looks like a win for Wipro. The 2.6-times-sales valuation means Wipro has bought itself a company for about half the multiple to sales that its own shares command. On the other hand, Infocrossing earns just a 4% profit margin. That's a far cry from the 19% that Wipro itself nets on its revenue. If Wipro can leverage higher margins out of Infocrossing -- all well and good. But if it can't, I have to wonder whether growing by acquisition might be the wrong move for Wipro.
Learn more about this company in: