Subscribe to Entrepreneur for $5
Subscribe

Factors to Note Ahead of Infosys' (INFY) Q3 Earnings Release

Though Infosys' (INFY) Q3 performance is likely to have benefited from the ongoing digital transformations and large deal wins, elevated expenses might have hurt the bottom line.

By
This story originally appeared on Zacks

Infosys Limited INFY is slated to report third-quarter fiscal 2022 results on Jan 12.

- Zacks

Over the trailing four quarters, the company’s earnings beat the Zacks Consensus Estimate once and met the same on other three occasions, the average beat being 3.3%.

In the last reported quarter, Infosys’ adjusted earnings of 17 cents per share met the Zacks Consensus Estimate and grew 13.3% year over year. Revenues of $4 billion jumped 20.7% year over year and surpassed the Zacks Consensus Estimate of $3.93 billion.

The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $4.08 billion, suggesting a 16% increase from the year-ago period. The consensus mark for earnings stands at 17 cents per share, flat compared with the year-ago quarter.

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 Likely to Impact Q3 Results

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

Infosys added 117 clients during second-quarter fiscal 2022. It also signed multiple large deals of a contract value worth $2.15 billion.

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

Growing traction of its solutions and services in the commercial and corporate banks, consumer, cost and payments, wealth management and custody and mortgage portfolios of its business is likely to have been an upside during the quarter under review.

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

What Our Model Says

Our proven model does not conclusively 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. However, that’s not the case here.

Infosys carries a Zacks Rank #2 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Apple AAPL, Advanced Micro Devices AMD and MSCI MSCI have the right combination of elements to post an earnings beat in their upcoming releases.

Apple is slated to report first-quarter fiscal 2022 results on Jan 27. The company carries a Zacks Rank #2 and has an Earnings ESP of +1.68% at present. Apple’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while meeting the same on one occasion, the average surprise being 22.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for quarterly earnings is pegged at $1.89 per share, suggesting a year-over-year improvement of 12.5%. AAPL’s quarterly revenues are estimated to increase 6.2% year over year to $118.4 billion.

Advanced Micro Devices carries a Zacks Rank #2 and has an Earnings ESP of +3.77%. The company is expected to report fourth-quarter 2021 results on Jan 25. Advanced Micro Devices’ earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 14%.

The Zacks Consensus Estimate for AMD’s fourth-quarter earnings is pegged at 75 cents per share, indicating year-over-year growth of 44.2%. The consensus mark for revenues stands at $4.52 billion, suggesting a year-over-year increase of 39.3%.

MSCI currently carries a Zacks Rank #2 and has an Earnings ESP of +1.21%. The company is slated to report its fourth-quarter 2021 results on Jan 27. MSCI’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 4.6%.

The Zacks Consensus Estimate for MSCI’s fourth-quarter earnings stands at $2.49 per share, implying a year-over-year increase of 27%. MSCI is estimated to report revenues of $538 million, which suggest growth of 21.3% from the year-ago quarter.



Zacks' Top Picks to Cash in on Artificial Intelligence

In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.

See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

Apple Inc. (AAPL): Free Stock Analysis Report

 

Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report

 

Infosys Limited (INFY): Free Stock Analysis Report

 

MSCI Inc (MSCI): Free Stock Analysis Report

 

To read this article on Zacks.com click here.