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Fidelity National (FIS) Up 3.5% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Fidelity National Information Services, Inc. (FIS - Free Report) . Shares have added about 3.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fidelity’s first-quarter 2017 adjusted earnings per share from continuing operations came in at $0.86, surpassing the Zacks Consensus Estimate of $0.82. Earnings improved 8.9% from the year-ago quarter figure of $0.79.
Better-than-expected results were supported by higher revenues and lower expenses.
Net earnings were $144 million or $0.42 in the reported quarter compared with $59 million or $0.17 in the prior-year quarter.
Revenues Increase, Expenses Decline
Revenues of $2.26 billion jumped 3.4% year over year and almost matched the Zacks Consensus Estimate.
Organic revenue growth was 1.7% in the quarter.
Selling, general and administrative expenses came in at $413 million, down 7% year over year.
Segment wise, Integrated Financial Solutions’ revenues grew 1.4% year over year to $1.13 billion. Revenues from Global Financial Solutions were up 2.9% year over year to $1.02 billion.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) grew 7.1% year over year to $682 million, while EBITDA margin was 30.2%.
Balance Sheet & Cash Flow
As of Mar 31, 2017, cash and cash equivalents were $683 million compared with $682 million as of Mar 31, 2016. Debt outstanding was nearly $9.5 billion.
In the quarter, net cash provided by operations was $705 million and free cash flow was $363 million.
Fidelity paid dividends worth $95 million in the quarter.
Outlook
Fidelity projects organic revenue growth to be in the range of 2–3%, while reported revenue growth is estimated in the range of 1–2% for 2017. Particularly, organic revenue growth for the IFS segment is expected at 3–% and GFS at 4–5% for 2017.
Adjusted earnings per share are expected to be in the band of $4.15–$4.30 for 2017 compared with $3.82 in 2016. Management anticipates earnings per share to be in the range of $0.96–$0.98 in second-quarter 2017.
Adjusted EBITDA is expected in the range of $3.04–$3.12 billion in 2017.
Management expects cost synergies run rate exceeding $300 million in 2017.
Term fees are projected in the range of $40–$50 million for 2017.
Banking and wealth, along with Payments revenues, is expected to remain low through second-quarter 2017.
Management continues to expect positive results from European and the Asia-Pacific markets, and Brazil. Consulting, which grew 3.5%, is expected to sustain growth in single digits for the remaining 2017.
Revenue from non-strategic assets and Corporate and Other is expected to create approximately 1% of top-line headwind to consolidated organic revenue growth for 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to six lower.
Fidelity National Information Services, Inc. Price and Consensus
At this time, the stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% 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.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Fidelity National (FIS) Up 3.5% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Fidelity National Information Services, Inc. (FIS - Free Report) . Shares have added about 3.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fidelity Q1 Earnings Beat Estimates, Expenses Decline
Fidelity’s first-quarter 2017 adjusted earnings per share from continuing operations came in at $0.86, surpassing the Zacks Consensus Estimate of $0.82. Earnings improved 8.9% from the year-ago quarter figure of $0.79.
Better-than-expected results were supported by higher revenues and lower expenses.
Net earnings were $144 million or $0.42 in the reported quarter compared with $59 million or $0.17 in the prior-year quarter.
Revenues Increase, Expenses Decline
Revenues of $2.26 billion jumped 3.4% year over year and almost matched the Zacks Consensus Estimate.
Organic revenue growth was 1.7% in the quarter.
Selling, general and administrative expenses came in at $413 million, down 7% year over year.
Segment wise, Integrated Financial Solutions’ revenues grew 1.4% year over year to $1.13 billion. Revenues from Global Financial Solutions were up 2.9% year over year to $1.02 billion.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) grew 7.1% year over year to $682 million, while EBITDA margin was 30.2%.
Balance Sheet & Cash Flow
As of Mar 31, 2017, cash and cash equivalents were $683 million compared with $682 million as of Mar 31, 2016. Debt outstanding was nearly $9.5 billion.
In the quarter, net cash provided by operations was $705 million and free cash flow was $363 million.
Fidelity paid dividends worth $95 million in the quarter.
Outlook
Fidelity projects organic revenue growth to be in the range of 2–3%, while reported revenue growth is estimated in the range of 1–2% for 2017. Particularly, organic revenue growth for the IFS segment is expected at 3–% and GFS at 4–5% for 2017.
Adjusted earnings per share are expected to be in the band of $4.15–$4.30 for 2017 compared with $3.82 in 2016. Management anticipates earnings per share to be in the range of $0.96–$0.98 in second-quarter 2017.
Adjusted EBITDA is expected in the range of $3.04–$3.12 billion in 2017.
Management expects cost synergies run rate exceeding $300 million in 2017.
Term fees are projected in the range of $40–$50 million for 2017.
Banking and wealth, along with Payments revenues, is expected to remain low through second-quarter 2017.
Management continues to expect positive results from European and the Asia-Pacific markets, and Brazil. Consulting, which grew 3.5%, is expected to sustain growth in single digits for the remaining 2017.
Revenue from non-strategic assets and Corporate and Other is expected to create approximately 1% of top-line headwind to consolidated organic revenue growth for 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to six lower.
Fidelity National Information Services, Inc. Price and Consensus
Fidelity National Information Services, Inc. Price and Consensus | Fidelity National Information Services, Inc. Quote
VGM Scores
At this time, the stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% 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.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.