And estimates have been rising after the company delivered its third consecutive beat. It is a Zacks #2 Rank (Buy).

Company Description

FIS, or Fidelity National Information Services, is the world's largest provider of banking and payments technology. It provides core bank processing, transaction processing and card issuing services, and other outsourcing services.

Its revenues are divided as follows:

Financial Solutions: 36%
Payment Solutions: 44%
International Solutions: 20%

The company is headquartered in Jacksonville, Florida and has a market cap of $9.3 billion.

Fourth Quarter Results

FIS reported better than expected results for the fourth quarter on February 13. Earnings per share came in at 66 cents, beating the Zacks Consensus Estimate by a penny. It was a 3% increase over the same quarter in 2010.

Revenue rose 7% to $1.494 billion, slightly ahead of the Zacks Consensus Estimate of $1.490 billion. This was driven by a 5% increase in organic revenue.

Revenue in the International Solutions segment was up 19%, while the Financial Solutions segment was up 6%. Revenue in the Payment Solutions increased 2%.

Meanwhile, adjusted operating income rose 5% while the operating margin declined 60 basis points to a still very strong 24.5%.

Rising Estimates

Following solid Q4 results, analysts revised their estimates higher for both 2012 and 2013, sending the stock to a Zacks #2 Rank (Buy).

Management expects 2012 EPS between $2.47 and $2.57 on organic revenue growth of 3-5%. The Zacks Consensus Estimate for 2012 is $2.53, within guidance, and representing 11% growth over 2011 EPS. The 2013 consensus estimate is currently $2.86, corresponding with 13% growth.

Management also expects EPS growth of 12-15% per year and organic revenue growth of 4-7% through 2015. The consensus long-term growth rate is within this range at 13.5%.

Strong Cash Flow

FIS reported Q4 free cash flow of $294 million, which was up 33% year-over-year. The company has been using its strong cash flow to buy back stock and pay a dividend.

In 2011, FIS spent $399 million buying back 15 million shares of stock. And after paying the same 5 cent per share quarterly dividend since 2003, the company raised it to 20 cents in March.

It currently yields 2.5%.

Reasonable Valuation

Valuation looks reasonable for FIS with shares trading at just 12.5x 12-month forward earnings, a discount to its 10-year median of 15.8x.

Its PEG ratio is an attractive 0.9.

The Bottom Line

With rising estimates, strong growth projections, a solid 2.5% yield and a PEG ratio below 1.0, FIS offers investors attractive total return potential.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Co-Editor of the Reitmeister Value Investor.