Fiserv (FI): Hidden Blue Chip Gem of Fintech

With a market capitalization of $90.21 billion, Fiserv, Inc. (FI) Provides payments and financial technology services globally. The broader fintech sector has suffered over the past few years as banks’ refusal to experiment and rising interest rates have impacted payment volumes.

However, Fiserv has long-term contracts with major banks and is performing strongly. FI’s stock price has soared more than 80% over the past five years. Moreover, the stock price is up almost 25% in the past six months.

Additionally, fintech companies have recently received significant attention from institutions. Agency Owns approximately 92.5% of FI. JPMorgan Chase & Co, Vanguard Group Inc, Nuveen Asset Management, LLC, Charles Schwab Investment Management Inc, Envestnet Asset Management Inc, Scharf Investments, LLC, DSM Capital Partners LLC and UBS Group AG bought more FI shares.

Institutional investors typically conduct in-depth research and analysis before investing, which can be seen as a vote of confidence in the FI’s potential. they are known Have resources and expertise We conduct extensive research into investment opportunities that are not publicly available to individual investors.

The increase in purchasing activity by several institutions therefore reflects optimistic sentiments about the performance and growth prospects of FIs.

Let’s analyze FI’s latest earnings report and other factors driving institutional interest in this payment processing company.

Solid Q1 2024 Results

for First quarter ended March 31, 2024, FI’s revenue increased 7.4% % year over year to $4.88 billion. The company’s processing and services revenue increased 8.9% year over year. Adjusted operating income was $1.63 billion, an increase of 13.4% year-over-year.

Additionally, Fiserv’s adjusted net income and earnings per share were $1.12 billion and $1.88, respectively, up 12% and 19%, respectively, from the previous year. Additionally, the company’s total current assets as of March 31, 2024 were $37.09 billion, compared to $34.81 billion as of December 31, 2023.

During the first quarter, the company repurchased 10.2 million shares of common stock for $1.5 billion.

Commenting on the outstanding financial performance, Frank Bisignano, Chairman, President and CEO of Fiserv, added: -High quality customer base.”

Optimistic full-year outlook for 2024

FI confirmed its organic revenue growth outlook for fiscal 2024 at 15-17%. The company also raised its earnings-per-share guidance to $8.75 from $8.60, indicating growth of 14% to 16% in 2024.

“Fiserv is committed to a virtuous cycle of investments, revenue growth, operating leverage, capital returns and reinvestment driven by customer focus, operational excellence and a strong balance sheet,” said Frank Bisignano, CEO.

He added, “This proven model, coupled with our strong first quarter performance, has helped us increase our full-year 2024 adjusted earnings per share outlook.”

favorable analyst estimates

Analysts expect FI’s revenue to reach $4.88 billion in the second quarter ending June 2024, up 8.2% year over year. The consensus EPS estimate of $2.10 for the current quarter represents a 16% year-over-year improvement. Moreover, Fiserv has surpassed consensus revenue and EPS estimates in each of the four subsequent quarters, which is impressive.

Additionally, FI revenue and EPS for the fiscal year ending December 2024 are estimated at $19.39 billion and $8.70, up 7.5% and 15.6% year-over-year, respectively. The Street expects the company’s revenue and EPS to hit $21.08 billion and $10.09 billion in fiscal 2025, up 8.7% and 16%, respectively, from the previous year.

Recent strategic partnerships and product launches

FI announced on May 8: WaFd, Inc. (WAFD) I chose CashFlow Central.SM to Strengthening small and medium-sized business banking services. With this move, WaFd Bank small business customers will have access to all the features available to process deposits and withdrawals through their digital banking relationship, streamlining their financial management and saving time.

Developed by Fiserv in collaboration with Melio, a prominent B2B payments platform provider, CashFlow Central is an integrated digital payments and cash flow management platform. This solution allows small businesses to send electronic invoices, accept payments via ACH transfer or credit card, digitize supplier invoices, and pay billers and suppliers via bank account or credit card.

Also FI on April 17th Clover Kiosk and enhanced Clover Kitchen display system launched We help restaurants streamline operations and improve customer experiences. Designed to integrate seamlessly with each other and with additional Clover software and hardware, these solutions facilitate end-to-end order management at a cost of ownership that is up to 40% lower than competitive products.

Fiserv in February Partnership with Genesis Bankis one of two diverse Multiracial Minority Depository Institutions (MDIs) in the United States dedicated to economic empowerment and positive impact in local communities. This collaboration will provide customized technology packages to small businesses in the low- and moderate-income (LMI) communities served by Southern California-based Genesis Bank.

Designed specifically to address these business challenges, this bundle provides access to select Clover point-of-sale (POS) technologies from Fiserv without upfront costs or discounted subscription fees.

solid profitability

FI’s trailing 12-month EBITDA margin of 42.20% is 85.2% higher than the industry average of 22.80%. Likewise, the stock’s trailing 12-month FCF margin of 20.34% is 15.7% higher than the industry average of 17.58%. CAPEX/Sales for 12 months is 7.56%, well above the industry average of 1.94%.

Additionally, the stock’s trailing 12-month ROCE and ROTA of 11.01% and 3.50%, respectively, compare favorably to the industry averages of 10.58% and 1.05%.

conclusion

FI has extended its robust revenue growth and margin expansion into 2024, with earnings per share up 19% year-over-year during the first quarter. Following its strong financial performance, the company raised its 2024 adjusted EPS outlook to $8.60 to $8.75.

Fiserv maintains a resilient business model by improving productivity, introducing innovative products and services in areas such as account processing, digital banking, payments, merchant acquisition and processing, and expanding sales opportunities within a diverse and high-quality customer base. .

Moreover, FI nominated as one of Fortune® America’s Most Innovative Companies 2 years in a row. This designation highlights organizations leading innovation in the United States. Each factor, including product innovation, process innovation, and innovation culture, contributed equally to the overall innovation score.

According to Statista, the total transaction value of the digital payments market is expected to reach $3.7 trillion by 2024. Digital commerce will be the largest segment of the market this year, with an expected total transaction value of $2.26 trillion. Additionally, the total transaction value is estimated as follows: Recorded CAGR of 10.7%It is expected to reach a total of $4.62 trillion by 2028.

The promising prospects of the digital payments industry will bode well for FIs.

Additionally, analysts are optimistic about Fiserv’s growth trajectory. Citigroup analysts FI stock target price increased from $171 to $180 While maintaining our Buy rating. TD Cowen also reaffirmed a Buy rating on the stock, adjusting its price target from $167 to $175. In line with this, UBS Group analysts maintained a Buy rating and raised their price target from $170 to $185.

Several factors, including strong financial performance, leading position in the fintech industry, and bright growth prospects, have led to increased institutional interest in FIs, as evidenced by the fact that institutions own more than 92% of the stock.

Considering this background, it may be wise to invest in this stock to earn significant profits.