Head-To-Head Review: Infosys (INFY) versus Amdocs (DOX)

Infosys (NYSE: INFY) and Amdocs (NASDAQ:DOX) are both mid-cap technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, earnings, institutional ownership, risk, dividends and valuation.

Dividends

Infosys pays an annual dividend of $0.39 per share and has a dividend yield of 2.5%. Amdocs pays an annual dividend of $0.88 per share and has a dividend yield of 1.3%. Infosys pays out 39.4% of its earnings in the form of a dividend. Amdocs pays out 29.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Amdocs has raised its dividend for 4 consecutive years.

Volatility and Risk

Infosys has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Amdocs has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500.

Insider & Institutional Ownership

19.0% of Infosys shares are held by institutional investors. Comparatively, 93.3% of Amdocs shares are held by institutional investors. 22.4% of Infosys shares are held by insiders. Comparatively, 15.4% of Amdocs shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Infosys and Amdocs’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Infosys 21.04% 21.05% 17.17%
Amdocs 11.30% 14.77% 9.81%

Valuation & Earnings

This table compares Infosys and Amdocs’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Infosys $10.21 billion 3.46 $2.14 billion $0.99 15.62
Amdocs $3.87 billion 2.45 $436.82 million $2.96 22.04

Infosys has higher revenue and earnings than Amdocs. Infosys is trading at a lower price-to-earnings ratio than Amdocs, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings for Infosys and Amdocs, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Infosys 2 8 2 0 2.00
Amdocs 0 4 2 0 2.33

Infosys currently has a consensus price target of $15.06, indicating a potential downside of 2.57%. Amdocs has a consensus price target of $70.17, indicating a potential upside of 7.55%. Given Amdocs’ stronger consensus rating and higher possible upside, analysts plainly believe Amdocs is more favorable than Infosys.

Summary

Infosys beats Amdocs on 9 of the 16 factors compared between the two stocks.

Infosys Company Profile

Infosys Limited is engaged in consulting, technology, outsourcing and next-generation services. The Company, along with its subsidiaries, provides business information technology services comprising application development and maintenance, independent validation, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management; consulting and systems integration services comprising consulting, enterprise solutions, systems integration and advanced technologies; products, business platforms and solutions to accelerate intellectual property-led innovation, including Finacle, its banking solution, and offerings in the areas of Analytics, Cloud and Digital Transformation. Its segments are Financial Services and Insurance (FSI), Manufacturing and Hi-tech (MFG & Hi-TECH), Energy & utilities, Communication and Services (ECS), Retail, Consumer packaged goods and Logistics (RCL), and Life Sciences and Healthcare (LSH).

Amdocs Company Profile

Amdocs Limited is a provider of software and services for communications, entertainment and media industry service providers. The Company develops, implements and manages software and services associated with business support systems (BSS), operational support systems (OSS) and network operations to enable service providers to introduce new products and services, process orders, monetize data, support new business models and enhance their understanding of their customers. The Company’s segment provides software products and services. Its services include strategic business consulting, systems integration and transformation, managed services and testing. Its managed services provide multi-year, flexible and tailored business processes and applications services, including application development and maintenance, information technology (IT) and infrastructure services, testing and professional services.

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