Before the Call: Infosys Sizzles

After beating earnings estimates with a stick all last year, Bangalore business software behemoth Infosys (Nasdaq: INFY) is gearing up for a repeat just the other side of this weekend. On July 11, it releases its first quarterly report of fiscal 2008.

After the news comes out, we'll have time a-plenty to dissect it. But in these few hours before we begin obsessing over Infosys's short-term progress, let's take a moment to review what investors think about it as a long-term investment. Our tool in this endeavor: Motley Fool CAPS, where we poll more than 50,000 investors for their views on well over 4,000 companies, Infosys among them. Here's what Fools have to say about it.

Up or down?
Well over 600 investors have submitted ratings on Infosys. Their verdict: "Mmm. Spicy Indian stock!"

Of them, 98% expect Infosys to outperform the market, and the very best investors -- our CAPS All-Stars -- agree. No surprise here: Infosys scores a perfect five-star rating on CAPS.

The last time we previewed an earnings report for Infosys, we looked at the company's rating in comparison to global "technical & system software" firms. Today, let's try a different perspective. Weighed against other India-based, U.S. ADR-listed firms, we find Infosys' popularity more the rule than the exception:

India Group CAPS Rating

Infosys *****

Wipro (NYSE: WIT) *****

Satyam Computer Services (NYSE: SAY) *****

Tata Motors (NYSE: TTM) *****

HDFC Bank (NYSE: HDB) *****

Dr. Reddy's Lab (NYSE: RDY) ****

Cognizant Technology (Nasdaq: CTSH) ****

Wall Street vs. Main Street
Wall Street is even more bullish (bullisher?) on Infosys. All five of the analysts we track expect Infosys to outperform the market. So far, so good -- over the past 52 weeks, the stock has indeed outperformed the S&P 500 by 11 percentage points.

Bull pitch
The India story is well-known by now, so this won't come as a surprise. But here, in a nutshell, are a few of the reasons Foolish All-Star investors like Infosys: They see it as "capitalizing on low cost, high quality Indian workforce," and led by "top class senior management." Also attractive is that fact that 90% of Infosys' revenues are recurring (giving superb visibility into the firm's future prospects).

Bear pitch
Bears are in short supply around Infosys. About the only negative comments you'll find concerning the company on CAPS is a blanket statement that the stock is "over priced" (though, at 34 times trailing earnings, and with a prediction of 26% growth per year for the next five years, it doesn't seem horribly expensive). Also, there's the possibility that it might suffer from a strong rupee, which I also find unconvincing. From an investor's perspective, a strong rupee might hurt Infosys' ability to land new contracts, but it also makes the firm's local profits, on its 90% recurring revenues, worth more in U.S. dollars.