Buy, Sell or Hold? Detail Analysis Infosys Limited (INFY) or At Rapid7, Inc. (RPD)?

The shares of Infosys Limited have increased by more than 18.82% this year alone. The shares recently went up by 0.81% or $0.09 and now trades at …

The shares of Infosys Limited have increased by more than 18.82% this year alone. The shares recently went up by 0.81% or $0.09 and now trades at $11.25. The shares of Rapid7, Inc. (NASDAQ:RPD), has jumped by 85.56% year to date as of 08/08/2019. The shares currently trade at $57.82 and have been able to report a change of -5.31% over the past one week.

The stock of Infosys Limited and Rapid7, Inc. were two of the most active stocks on Thursday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Next 5Y EPS Growth: 8.00% versus -0.46%

When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that INFY will grow it’s earning at a 8.00% annual rate in the next 5 years. This is in contrast to RPD which will have a positive growth at a -0.46% annual rate. This means that the higher growth rate of INFY implies a greater potential for capital appreciation over the years.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. The ROI of INFY is 19.30% while that of RPD is -20.40%. These figures suggest that INFY ventures generate a higher ROI than that of RPD.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, INFY’s free cash flow per share is a negative -89.3.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for INFY is 2.10 and that of RPD is 1.40. This implies that it is easier for INFY to cover its immediate obligations over the next 12 months than RPD. The debt ratio of INFY is 0.07 compared to 2.05 for RPD. RPD can be able to settle its long-term debts and thus is a lower financial risk than INFY.


INFY currently trades at a forward P/E of 18.81, a P/B of 5.92, and a P/S of 3.91 while RPD trades at a forward P/E of 155.43, a P/B of 31.94, and a P/S of 11.18. This means that looking at the earnings, book values and sales basis, INFY is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of INFY is currently at a -1.49% to its one-year price target of 11.42. Looking at its rival pricing, RPD is at a -17.25% relative to its price target of 69.87.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), INFY is given a 2.90 while 1.70 placed for RPD. This means that analysts are more bullish on the outlook for INFY stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for INFY is 8.40 while that of RPD is just 6.75. This means that analysts are more bullish on the forecast for RPD stock.


The stock of Rapid7, Inc. defeats that of Infosys Limited when the two are compared, with RPD taking 5 out of the total factors that were been considered. RPD happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, RPD is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for RPD is better on when it is viewed on short interest.

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Infosys Limited (INFY): Stock to Follow:

Infosys Limited (INFY):. As took short look on profitability, the firm profit margin which was recorded 18.30%, and operating margin was noted at …

Infosys Limited (INFY):

As took short look on profitability, the firm profit margin which was recorded 18.30%, and operating margin was noted at 21.50%. The company maintained a Gross Margin of 34.00%. The Institutional ownership of the firm is 18.70% while Insiders ownership is 18.20%. Company has kept return on investment (ROI) at 19.30% over the previous 12 months and has been able to maintain return on asset (ROA) at 18.60% for the last twelve months. Return on equity (ROE) recorded at 24.80%.

Infosys Limited (INFY) stock price registered the value at $11.25 by scoring a change of 0.81% at the end of Thursday trading session. The recent trading activity revealed that the stock price is at 27.81% off from its 52-week low and traded with move of -3.35% from high printed in the last 52-week period. The Company kept 4009.7M Floating Shares and holds 4303.64M shares outstanding.

The company’s earnings per share shows growth of -0.30% for the current year and expected to arrive earnings growth for the next year at 9.52% . Analyst projected EPS growth for the next 5 years at8.00%. The company’s EPS growth rate for past five years was 147.20%. The earnings growth rate for the next years is an important measure for investors planning to hold onto a stock for several years. The company’s earnings will usually have a direct relationship to the price of the company’s stock. The stock observed Sales growth of 151.30% during past 5 years. EPS growth quarter over quarter stands at 6.20% and Sales growth quarter over quarter is at 14.00%.

Infosys Limited (INFY) stock recent traded volume stands with 11865929 shares as compared with its average volume of 10779.93K shares. The relative volume observed at 1.1.

Volume Interpretation:

Volume is simply the number of shares traded during a specified time frame (e.g., hour, day, week, month, etc). The analysis of volume is a basic yet very important element of technical analysis. Volume provides clues as to the intensity of a given price move. Low volume levels are characteristic of the indecisive expectations that typically occur during consolidation periods (i.e., periods where prices move sideways in a trading range). Low volume also often occurs during the indecisive period during market bottoms. High volume levels are characteristic of market tops when there is a strong consensus that prices will move higher. High volume levels are also very common at the beginning of new trends (i.e., when prices break out of a trading range). Just before market bottoms, volume will often increase due to panic-driven selling.

Shares price moved with -3.35% from its 50 Day high and distanced at 9.97% from 50 Day low. Analyses consensus rating score stands at 2.9. For the next one year period, the average of individual price target estimates referred by covering sell-side analysts is $11.42.

The current ratio of 2.1 is mainly used to give an idea of a company’s ability to pay back its liabilities (debt and accounts payable) with its assets (cash, marketable securities, inventory, accounts receivable). As such, current ratio can be used to make a rough estimate of a company’s financial health. The quick ratio of 2.1 is a measure of how well a company can meet its short-term financial liabilities with quick assets (cash and cash equivalents, short-term marketable securities, and accounts receivable). The higher the ratio, the more financially secure a company is in the short term. A common rule of thumb is that companies with a quick ratio of greater than 1.0 are sufficiently able to meet their short-term liabilities.

The long term debt/equity shows a value of 0.06 with a total debt/equity of 0.07. It gives the investors the idea on the company’s financial leverage, measured by apportioning total liabilities by its stockholders equity. It also illustrates how much debt the corporation is using to finance its assets in relation to the value represented in shareholders’ equity.

SMA and Trends:

Moving averages are valuable, as they smooth daily fluctuations, allowing the technical analyst to see the underlying trend without being distracted by the small (daily) movements. A rising moving average usually signals an uptrend, while a falling moving average indicates a downtrend.

Some analysts have adopted the following approach, when it comes to relating the SMA with a particular trend: If the close price of a tradable instrument is above some simple moving average, then the trend must be bullish. If the close price is below some simple moving average, then the trend must be bearish. However, choosing a period for trend estimation is a matter of personal preferences. The period of the SMA will depend on one’s trading style and time frame for trading. Thus, choosing the appropriate period comes with experimentation and, of course, experience. Despite that simple moving averages provide help when identifying a trend, they do so after the trend has begun. Therefore, moving averages are lagging indicators, as they are based on past prices.

Infosys Limited (INFY) stock moved below -0.72% in contrast to its 20 day moving average displaying short-term a downward movement of stock. It shifted 3.15% up its 50-day simple moving average. This is showing medium-term bullish trend based on SMA 50. The stock price went above 8.56% from its 200-day simple moving average identifying long-term positive trend.

Callum Lyon

Callum Lyon holds a postgraduate degree in Software Engineering from Canada. ‘The stock market is filled with individuals who know the price of everything, but the value of nothing.’ Callum is a share market expert, being personally invested for over 6 years. He believes the most valuable nugget of wisdom for new investors is a quote from Phillip Fisher. He has been writing his entire life, and while he has made a career of business and finance reporting, he still enjoys writing short stories and poetry. Callum has worked as financial analyst until his retirement. He is a well-known research director and portfolio manager for more than 5 years. After many years in the market, he dedicated all his time to write articles highlighting different financial problems. Address: 54 Porana Place, NUGADONG, Western Australia Email: Zip code: 6609 Contact # (08) 9001 3062