Infosys INFY reported fourth-quarter fiscal 2026 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. For the fiscal fourth quarter, the company reported adjusted earnings of 23 cents per share, which beat the consensus estimate of 20 cents. The bottom line increased 15% year over year.
In the trailing four quarters, INFY’s earnings beat the Zacks Consensus Estimate twice and matched twice, with an average surprise of 10%.
Infosys’ fiscal fourth-quarter revenues increased 6.6% year over year to $5.04 billion from the year-ago quarter’s revenues of $4.73 billion. Key strategic initiatives, market positioning, remarkable growth across segments and unique digital offerings were the company's main drivers of the top line. The top line beat the Zacks Consensus Estimate of $5.02 billion.
Infosys Limited Price, Consensus and EPS Surprise
Infosys Limited price-consensus-eps-surprise-chart | Infosys Limited Quote
Infosys’ Q4 Details
Revenues across Europe and the Rest of the World recorded a year-over-year increase of 11.4% and 9.3%, respectively, on a reported basis. Revenues across North America increased 4.1%, while India registered a decline of 5.2% year over year on a reported basis. On a constant currency (cc) basis, Europe and the Rest of the World increased 4.1% and 5%, respectively. On a cc basis, North America increased 4.1%, while India remained flat.
INFY delivered year-over-year growth across most verticals in the fourth quarter. Financial Services remained the largest contributor, generating $1.41 billion, up 5.0% year over year. Manufacturing revenues increased 6.0% to $799 million, while Energy, Utilities, Resources & Services rose 8.1% to $664 million.
Life Sciences revenues climbed 15.3% to $369 million, and Communication sales increased 12.8% to $625 million. Hi-Tech was the key laggard, slipping 1.5% year over year to $387 million, and Retail posted more modest growth of 2.9% to $647 million. The Others business unit’s revenues increased 12.9% year over year to $140 million.
Infosys added 111 clients in the fiscal fourth quarter. The company reported that its clients, worth more than $100 million, now add up to 41, up from 39 in the year-ago quarter and remained flat sequentially.
Gross profits increased 8.9% year over year to approximately $1.55 billion. The gross margin expanded 70 bps on a year-over-year basis to 30.9%. The company’s operating income increased 12.6% year over year to $1.06 billion. The operating margin contracted 10 bps to 20.9% year over year.
INFY’s Balance Sheet and Cash Flow Details
Infosys ended the fiscal fourth quarter with consolidated cash and investments of $4.54 billion, up from $3.92 billion recorded in the previous quarter. During the fiscal fourth quarter, the company generated a free cash flow of $883 million.
Infosys Initiates FY27 Guidance
Infosys guided for fiscal 2027 revenue growth of 1.5% to 3.5% in constant currency, with operating margin expected between 20% and 22%.
On the fourth-quarter earnings call, management pointed to a large opportunity set in AI services, while also noting continued competitive intensity and productivity expectations from clients. INFY also expects growth to accelerate in Financial Services and in the Energy, Utilities, Resources & Services vertical in fiscal 2027, even as parts of Manufacturing remain challenging.
The Zacks Consensus Estimate for fiscal 2027 revenues and earnings is currently pegged at $21.15 billion and 85 cents per share, respectively.
INFY’s Zacks Rank and Stocks to Consider
Currently, Infosys carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector are Arista Networks ANET, Advanced Energy AEIS and Applied Materials AMAT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Arista Networks have gained 31.7% year to date. The Zacks Consensus Estimate for ANET’s 2026 earnings is pegged at $3.54 per share, up by a penny over the past seven days, indicating an increase of 18.8% year over year.
Shares of Advanced Energy have gained 82.7% year to date. The Zacks Consensus Estimate for AEIS’ 2026 earnings is pegged at $8.32 per share, up by 12 cents over the past 60 days, indicating a rise of 29.8% year over year.
Applied Materials shares have surged 57.2% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $11.10 per share, down by a penny over the past 30 days, indicating an increase of 17.8% year over year.
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This article originally published on Zacks Investment Research (zacks.com).