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Infosys to Report (INFY) Q2 Earnings: What’s in the Cards?


Infosys Limited INFY is set to report fiscal second-quarter 2019 results on Oct 16.

The company beat the Zacks Consensus Estimate in three of the trailing four quarters and matched it once, delivering an average positive surprise of 4.04%.

In the last reported quarter, the company’s earnings of 27 cents per share topped the Zacks Consensus Estimate of 25 cents and also came ahead of the year-ago figure of 24 cents per share.

Revenues of $2.83 billion increased 6.8% year over year but missed the Zacks Consensus Estimate of $2.87 billion. In terms of constant currency (CC), revenues were up 6 %.

Let’s see how things are shaping up for the upcoming announcement.

Factors at Play

Infosys’ focus on Agile Digital and AI-driven Core services is a tailwind. The company is benefiting from strength in energy, utilities, retail, insurance and manufacturing sectors.

Growing adoption of the company’s offerings is also evident from the lucrative client wins in the last reported quarter. In the fiscal second quarter, the company won a $700 million deal from U.S. telecom company Verizon VZ and $300 million deal from Microsoft MSFT.

Moreover, Infosys’ strategy to expand its presence in the regions it operates so as to help clients in business transformation also makes us optimistic. During the fiscal second quarter, it inaugurated a Digital Studio in Berlin to expand its presence in the market for digital transformation solutions in Europe. The company also formed a joint venture with Singapore-based Temasek to expand its footprint in Southeast Asia.

Furthermore, the company, in its attempt to target enterprise customers, also joined forces with Alphabet’s GOOGL Google Cloud to offer cloud transformation and migration services.

However, sluggish performance of the Financial Services segment in the last reported quarter makes us apprehensive. Weaknesses in the European financial market is an overhang on this quarter as well. Besides, unfavorable foreign exchange movement remains a headwind.

Additionally, an unfavorable political climate in the United States and difficulties in adapting to the changing political climate in the region are a direct threat to the company’s economical cost structure, which focuses on using its workforce on sites located abroad.

Infosys Limited Price and EPS Surprise

Infosys Limited Price and EPS Surprise | Infosys Limited Quote

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Infosys has a Zacks Rank #3 and its Earnings ESP is -1.72%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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