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Here's Why Fiserv (FISV) Is An Attractive Pick Right Now

Published 04/02/2018, 05:59 AM
Updated 07/09/2023, 06:31 AM

A wise investment decision involves buying well-performing stocks at the right time while selling those that are at risk. In fact, a rise in share price and strong fundamentals signal a stock’s bullish run.

Fiserv (NASDAQ:FISV), Inc. (NYSE:FIS) has performed well so far this year and possesses a great potential to carry the momentum forward. Therefore, if you have not taken advantage of the share price appreciation yet, it’s time you add this gaming stock to your portfolio now.

Here are a few reasons why the stock is worth considering.

Impressive Run on the Market

A look at the company’s price trend reveals that the stock has had an impressive run on the bourse over the past year. Fiserv has gained 23.3%, significantly outperforming the S&P 500’s rally of 12.2%.

Northward Estimate Revisions

In the current year, 15 estimates moved north over the past 60 days versus no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for the current year increased 8.4%.

Positive Earnings Surprise History

Fiservhas a descent earnings surprise history. The company outpaced the Zacks Consensus Estimate in two of the trailing four quarters, delivering an average positive earnings surprise of 0.8%.

Fiserv, Inc. Price and EPS Surprise

Strong Growth Prospects

The company’s Zacks Consensus Estimate for 2018 earnings of $3.11 reflects year-over-year growth of 21.5%. Moreover, earnings are expected to register 13.1% growth in 2019. The stock has long-term expected earnings per share growth rate of 11.5% and a Zacks Rank #2 (Buy).

Solid Growth Drivers

Fiserv’s dominant position in the financial and payments solutions business is a big positive. We believe that the broad and diverse customer base, efforts to enhance operational efficiency, high recurring revenues and continued technology upgrades should help the company to drive growth. The company is also expected to achieve savings of $250 million from its new five-year operational effectiveness program.

Accretive acquisitions have been a key growth factor for Fiserv over the years. In the third quarter of 2017, the company completed the acquisitions of Monitise, PCLender and Dovetail Group. The product-oriented acquisitions are expected to further enhance its clientele in the United States as well as in international markets. Last December, the company acquired Online Banking Solutions Corp to improve digital banking business and cash management capacities.

In 2017, the company also completed the acquisitions of ACI Worldwide’s Community Financial Services business and Architect, an online and mobile banking solution for retail and business customers. Furthermore, it acquired a small business – Billers Solutions — which has expanded its presence on the SaaS platform. In early 2013, it acquired Open Solutions — a leading technology provider — for approximately $850 million.

Also, most of the Open Solutions contracts are long term in nature, thus adding recurring revenues to the company’s top line. We believe that the company will continue to pursue accretive acquisitions, which are likely boost its market share and customer base going forward.

Additionally, Fiserv is focused on returning value to shareholders through buybacks. The company bought back 1.5 million shares for $189 million in the fourth quarter of 2018. Fiserv had 10.7 million shares remaining for buyback as of Dec 31, 2017.

Other Stocks to Consider

Some other top-ranked stocks in the business services sector are Mastercard (NYSE:MA) , VeriFone Systems (NYSE:PAY) and Fidelity National Information Services (NYSE:FIS) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Mastercard, VeriFone and Fidelity National is projected to be 18.3%, 12%% and 8.9%, respectively.

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Verifone Systems, Inc. (PAY): Free Stock Analysis Report

Mastercard Incorporated (MA): Free Stock Analysis Report

Fidelity National Information Services, Inc. (FIS): Free Stock Analysis Report

Fiserv, Inc. (FISV): Free Stock Analysis Report

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