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Infosys (INFY) to Report Q2 Earnings: What's in Store?

Though the ongoing digital transformations and large deal wins are likely to have aided Infosys' (INFY) Q2 top-line performance, elevated expenses might have hurt its profitability.

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This story originally appeared on Zacks

Infosys Limited INFY is slated to report second-quarter fiscal 2022 results on Oct 13.

- Zacks

Over the trailing four quarters, the company’s earnings beat the Zacks Consensus Estimate twice and came in line on other two occasions, the average beat being 5.1%.

In the last reported quarter, Infosys’ adjusted earnings of 17 cents per share came in line with the Zacks Consensus Estimate and grew 26% year over year. Revenues of $3.78 billion jumped 21.2% year on year as well as surpassed the Zacks Consensus Estimate of $3.70 billion.

The Zacks Consensus Estimate for the fiscal second-quarter revenues is pegged at $3.93 billion, suggesting an 18.8% increase from the year-ago period. The consensus mark for earnings is pinned at 17 cents per share, calling for 13.3% year-on-year growth.

Let’s see how things have shaped up prior to this announcement.

Infosys Limited Price and EPS Surprise Infosys Limited Price and EPS Surprise

Infosys Limited price-eps-surprise | Infosys Limited Quote

Factors at Play

Infosys’ fiscal second-quarter performance is likely to have benefited from large deal wins and growth in digital services. The India-based IT services provider’s efforts to reinforce the digital-transformation capabilities for expanding and solidifying its position in the highly competitive environment are a steady tailwind.

The company had added 113 clients during first-quarter fiscal 2022. It also signed multiple large deals of contract value worth $2.6 billion.

Additionally, the exponential demand for cloud, data-analytics solutions and services, Internet of Things and security is likely to have driven the company’s quarterly revenues during the quarter to be reported. Also, higher investments by clients in digital transformation, artificial intelligence and automation are anticipated to have been conducive to its fiscal second-quarter performance.

While headwinds in the financial services segment are still a concern, the growing traction in the commercial and corporate banks, consumer, cost and payments, wealth management and custody, plus mortgage portfolios of its business are likely to have been positives during the quarter under review.

Nonetheless, inflated investments in sales and localization, and rising costs to grab large deals might have hurt Infosys’ bottom-line numbers during the quarter under discussion.

What Our Model Says

Our proven model does not predict an earnings beat for Infosys this season. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Infosys has an Earnings ESP of +0.00% and carries a Zacks Rank of 3, at present.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

NVIDIA NVDA has an Earnings ESP of +0.30% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

UnitedHealth Group UNH has an Earnings ESP of +1.95% and carries a Zacks Rank #2, at present.

Heartland BancCorp HLAN has an Earnings ESP of +5.67% and holds a Zacks Rank of 2, currently.



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UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report

 

Infosys Limited (INFY): Free Stock Analysis Report

 

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Heartland BancCorp. (HLAN): Free Stock Analysis Report

 

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