It has been about a month since the last earnings report for Fidelity National Information Services (FIS Quick QuoteFIS - Free Report) . Shares have lost about 5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Fidelity National due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Fidelity Q4 Earnings Beat Estimates, Revenues Rise Y/Y

Fidelity reported fourth-quarter 2021 adjusted earnings per share (EPS) of $1.92, surpassing the Zacks Consensus Estimate of $1.89. Also, the bottom line compared favorably with the year-ago quarter’s figure of $1.62.

Notable increases in margin and organic revenue growth were positives. Continued recovery in the global economy from the ongoing pandemic also supported the performance. Despite achieving annual run-rate revenue synergies and operational expense synergies of around $750 million and $900 million, respectively, a rise in selling, general and administrative expenses was a hurdle.

On a GAAP basis, fourth-quarter net earnings attributable to common stockholders stood at $291 million or 48 cents per share, up substantially from $103 million or 17 cents in the prior-year quarter.

In 2021 adjusted net earnings, attributable to common stockholders, of $4.07 billion or $6.55 per share, were up 19% and 20%, respectively, from the prior year.

Organic Revenues Rise, Expenses Increase

Fourth-quarter 2021 revenues were $3.67 billion, up 10.7% year over year. However, the top line marginally lagged the Zacks Consensus Estimate of $3.70 billion. Organic revenues increased 11% in the quarter on higher growth across three operating segments.

Revenues for 2021 increased 11% from the prior-year level to $13.9 billion, reflecting strong growth by Fidelity’s operating segments.

Segment-wise, Merchant Solutions’ revenues climbed 19% to $1.19 billion. Revenues from Banking Solutions rose 8% to $1.67 million. Capital Market Solutions’ revenues jumped 8% to $716 million, while Corporate and Other segment’s revenues declined 3% to $96 million.

Selling, general and administrative expenses were $966 million, up 7% year over year.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased 14% to $1.71 billion from the year-ago quarter’s level. The adjusted EBITDA margin expanded 120 basis points to 46.4%.

Balance Sheet & Cash Flow

As of Dec 31, 2021, cash and cash equivalents were $2.01 billion compared with $1.96 billion as of Dec 31, 2020. The debt outstanding was $20.4 billion.

In the fourth quarter, net cash provided by operations was $961 million. Fidelity reported a free cash flow of $845 million.

It paid out dividends worth $237 million in the reported quarter.

First Quarter 2022 Guidance

All estimates are on a year-on-year basis.

Management expects revenues between $3.42-3.45 billion. Organic revenue growth of 7-8% is anticipated.

Revenues from Corporate and Other segment are anticipated to be $70 million.

Adjusted EPS is projected to be $1.44-1.47 indicating growth of 11-13%.

Management expects net interest expenses to be between $48-50 million. Depreciation and amortization expenses (excluding purchase price amortization) are anticipated to be $310 million.

Adjusted EBITDA is expected to be in the range of $1.41-1.42 billion. Adjusted EBITDA margin is expected to expand 50 bps to 41%.

Effective tax rate of 15% is expected.

Weighted average shares outstanding are anticipated to be 616 million.

2022 Guidance

Revenues are expected to be $14.78-$14.93 billion. Organic revenue growth of 7-9% is anticipated.

Management expects Banking Solutions segment to be up 6% or more during the year and in high single digits in the midterm, driven by new pipelines and its large and growing backlog.

Merchant Solutions segment is expected to grow in low double digits in 2022 and beyond.

Capital Markets segment are anticipated to accelerate revenue growth to the mid-to-upper single digits, driven by strong new sales, cross-sell opportunities and recurring revenue growth.

Revenues from Corporate and Other segment are anticipated to be $305 million.

Negative foreign exchange impact on revenues of $50 million is expected.

Management expects net interest expenses to be $190-200 million. Depreciation and amortization expenses (excluding purchase price amortization) are anticipated at $1.23 billion.

Adjusted EPS is projected to be $7.25-7.37, with year-over-year growth of 11-13%.

Adjusted EBITDA is expected to be $6.61-6.70 billion. Adjusted EBITDA margin is expected to expand 50-100 bps to 45%.

Effective tax rate of 15% is expected.

Weighted average shares outstanding are anticipated to be 609 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -5.54% due to these changes.

VGM Scores

Currently, Fidelity National has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Fidelity National has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.