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Why Infosys Stock Popped Today

By Evan Niu, CFA – Jul 15, 2020 at 1:23PM

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The technology outsourcing specialist reported better-than-expected earnings.

What happened

Shares of Infosys (INFY 0.13%) have popped today, up by 12% as of noon EDT, after the company reported fiscal first-quarter earnings results. The outsourcing specialist beat expectations for both the top and bottom lines and operating margin expanded.

So what

Revenue in the fiscal first quarter came in at $3.1 billion, ahead of Wall Street's forecast of $2.94 billion in sales. That translated into earnings per share of $0.13, also topping the consensus estimate of $0.12 per share. The technology outsourcing company also said its operating margin expanded by 220 basis points. Voluntary attrition for IT services declined to 12%.

Infosys logo

Image source: Infosys.

"Our Q1 results, especially growth, are a clear testimony to the relevance of our service offerings and deep understanding of clients' business priorities which is resonating with them in these times," CEO Salil Parekh said in a statement. "It also demonstrates the remarkable dedication of our employees and leadership during this period."

CFO Nilanjan Roy attributed the increased operating profitability to cost discipline combined with "tactical opportunities" created by the COVID-19 pandemic.

Now what

Infosys appointed a new independent director, Bobby Parikh, effective today, subject to shareholder approval. The company inked $1.74 billion in large deal signings, which gives it confidence it will grow revenue in fiscal 2021. Guidance for this fiscal year calls for revenue growth of 0% to 2% on a constant currency basis.

Parekh added, "Our confidence and visibility for the rest of the year is improving driven by our Q1 performance and large deal wins."

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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