Indian outsourcer Infosys
What analysts say:
- Buy, sell, or waffle? Thirty analysts follow Infosys. Twenty-seven of them think it's a buy; only three say hold.
- Revenue. Analysts are looking for 33% growth, to $992 million.
- Earnings. Profits are expected to grow a bit slower, up 31% to $0.46 per share.
What management says:
Reporting Q1 earnings back in July, Infosys cited "increasing demand for its business solutions and strong growth in service lines" in predicting that Q2 revenue would range from $974 million to $984 million (below estimates, you'll note). However, management nonetheless forecast $0.46 EPS in profit -- and analysts faithfully cribbed that number.
What management does:
Lending credence to management's profit forecast is the continuing trend of net margin expansion at Infosys. Notwithstanding a recent weakening in the firm's gross margins, and erratic performance at the operating level, rolling net margins have been steadily rising for the past year and a half.
3/06 |
6/06 |
9/06 |
12/06 |
3/07 |
6/07 |
|
---|---|---|---|---|---|---|
Gross |
42.2% |
41.8% |
41.9% |
42.1% |
42.5% |
41.7% |
Operating |
27.8% |
27.2% |
27.4% |
27.3% |
27.6% |
27.1% |
Net |
25.8% |
26.0% |
26.1% |
26.3% |
27.5% |
28.0% |
One Fool says:
Because Infosys works for major Western clients such as Hewlett-Packard
If it continues, however, the recent devaluation of the dollar may pose a risk to profits later this year -- and to forward guidance tomorrow.
For more info on Infosys, read: