July 6, 2023
Top 10 Stock Infosys Sell Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Infosys – Top 10 Stock in Nifty 50 India Index CNX Nifty 50
Infosys is listed as a top 10 stock on July 06, 2023 in the market index CNX Nifty 50 because of its high performance in at least one of the Obermatt investment strategies. While only half of the consolidated Obermatt Ranks exhibit above-average performance, the professional market sentiment is positive and it may be a solid investment proposition, especially if a growth recovery is to be expected soon. Based on the Obermatt 360° View of 16 (16% performer), Obermatt issues an overall sell recommendation for Infosys on July 06, 2023.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | IT Consulting & oth. Services |
| Index | BSE Sensex, Good Governace Growth Markets, Human Rights, Independent Boards Growth Markets, Recycling, CNX Nifty 50 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
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 Sell
| 360 METRICS | July 6, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 52 |
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| GROWTH | ||||||||
| GROWTH | 7 |
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| SAFETY | ||||||||
| SAFETY | 49 |
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| SENTIMENT | ||||||||
| SENTIMENT | 52 |
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| 360° VIEW | ||||||||
| 360° VIEW | 16 |
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ANALYSIS: With an Obermatt 360° View of 16 (better than 16% compared with alternatives), overall professional sentiment and financial characteristics for the stock Infosys are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Infosys. The consolidated Value Rank has an attractive rank of 52, which means that the share price of Infosys is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 52% of alternative stocks in the same industry. The consolidated Sentiment Rank has a good rank of 52, which means that professional investors are more optimistic about the stock than for 52% of alternative investment opportunities. But the consolidated Growth Rank has a low rank of 7, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. The consolidated Safety Rank has a riskier rank of 49, meaning 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 16, Infosys is worse than 84% of all alternative stock investment opportunities based on the Obermatt Method. This means that Infosys shares are on the riskier side for investors. Half of the consolidated Obermatt Ranks exhibit above-average performance, but the other half are below market levels. The company enjoys a good value (Value Rank of 52) and positive market sentiment in the professional investor community (Sentiment Rank of 52), but growth expectations are below-average (Growth Rank of 7) and the financing structure is on the risky side(Safety Rank of 49). This combination is rather dangerous, because high debt levels (low safety) require growth to finance the debt burden. The current low growth level may be temporary, because professionals are actually optimistic (positive sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. Companies with less growth typically have a lower price than fast-growing competitors. Even though professional investor sentiment is strong, we recommend further evaluating whether the future of Infosys is as challenging as the stock's low price suggests. Since the professional community is optimistic, the stock might just be going through a more challenging phase now, indicating that timing might be good now. ...read more
Sentiment Strategy: Professional Market Sentiment for Infosys positive
ANALYSIS: With an Obermatt Sentiment Rank of 52 (better than 52% 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 half above average for Infosys. Analyst Opinions are at a rank of 61 (better than 61% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. Market Pulse is also positive with a rank of 56, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 56% of competitors). But Analyst Opinions Change is negative with a below 50 rank of 39, which means that stock research experts are changing their opinions for the worse in recommending the company. In other words, they are getting more critical of investments in Infosys. There are also only so many institutional investors holding company stock with a Professional Investors rank of 41, which means that, currently, professional investors hold less stock in this company than in 59% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 52 (more positive than 52% compared with investment alternatives), Infosys has a reputation among professional investors that is above-average compared with that of its competitors. The signals are ambivalent. The positive news in the market contradicts the negative change in analyst recommendations. Since the overall analyst recommendations are still above average, the stock may be safer for investing, especially if it is not an extra-large company where Pros tend to be less present. In such a case, the Pro Investor rank is not a problem. ...read more
Value Strategy: Infosys Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 52 (better than 52% compared with alternatives), Infosys shares are more attractively priced than the majority of comparable stocks. 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 53 which means that the stock price compared with what market professionals expect for future profits is lower than for 53% 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 27, which means that the stock price is lower as regards to invested capital than for 27% of comparable investments. On the other hand, Price-to-Sales is less favorable than 55% of alternatives (only 45% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 24% 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 52, is a buy 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
Growth Strategy: Infosys Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 7 (better than 7% compared with alternatives), Infosys shows one of the most restricted growth dynamics in its industry. There is little 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 62, which means that currently professionals expect the company to grow its invested capital more than 29% 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 29 and Stock Returns with a rank of 15 are also low (below 85% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 7, is a sell 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
Safety Strategy: Infosys Debt Financing Safety below-average
| SAFETY METRICS | July 6, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 52 |
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| REFINANCING | ||||||||
| REFINANCING | 26 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 88 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 49 |
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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 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 88, meaning the company generates more profit to service its debt than 88% 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 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
Combined financial peformance: Infosys Lowest Financial Performance
| COMBINED PERFORMANCE | July 6, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 52 |
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| GROWTH | ||||||||
| GROWTH | 7 |
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| SAFETY | ||||||||
| SAFETY | 88 |
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| COMBINED | ||||||||
| COMBINED | 9 |
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ANALYSIS: With an Obermatt Combined Rank of 9 (worse than 91% compared with investment alternatives), Infosys (IT Consulting & oth. Services, India) shares have lower financial characteristics compared with similar stocks. Shares of Infosys are a good value (attractively priced) with a consolidated Value Rank of 52 (better than 52% of alternatives) but show below-average growth (Growth Rank of 7), and are riskily financed (Safety Rank of 49), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 9, is a sell recommendation based on Infosys's financial characteristics. As the company Infosys's key financial metrics exhibit good value (Obermatt Value Rank of 52) but low growth (Obermatt Growth Rank of 7) and risky financing practices (Obermatt Safety Rank of 49), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 52% of comparable companies, may indicate the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity. ...read more
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