Here’s Why We Think Infosys (NSE: INFY) Might Deserve Your Attention Today

It’s common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merits of good company fundamentals. Loss making companies can act like a sponge for capital – so investors should be cautious that they’re not throwing good money after bad.

So if this idea of ​​high risk and high reward does not suit, you might be more interested in profitable, growing companies, like Infosys (NSE: INFY). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

View our latest analysis for Infosys

Infosys’ Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years Infosys grew its EPS by 12% per year. That growth rate is fairly good, assuming the company can keep it up.

One way to double-check a company’s growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While Infosys did well to grow revenue over the last year, EBIT margins were dampened at the same time. So if EBIT margins can stabilize, this top-line growth should pay off for shareholders.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

NSEI: INFY Earnings and Revenue History June 23rd 2022

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls do not exist, you can check our visualization of consensus analyst forecasts for Infosys’ future EPS 100% free.

Are Infosys Insiders Aligned With All Shareholders?

Since Infosys has a market capitalization of ₹ 6.0t, we would not expect insiders to hold a large percentage of shares. But we do take comfort from the fact that they are investors in the company. We note that their impressive stake in the company is worth US $ 803b. This totals to 13% of shares in the company. Enough to lead management’s decision making process down a path that brings the most benefit to shareholders. Very encouraging.

Does Infosys Deserve A Spot On Your Watchlist?

One positive for Infosys is that it is growing EPS. That’s nice to see. To add an extra spark to the fire, significant insider ownership in the company is another highlight. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. We should say that we’ve discovered 3 warning signs for Infosys that you should be aware of before investing here.

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take into account your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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