Back to top

Image: Bigstock

Fidelity (FIS) Q2 Earnings Beat Estimates, Expenses Decline

Read MoreHide Full Article

Fidelity National Information Services Inc.’s (FIS - Free Report) second-quarter 2017 adjusted earnings per share from continuing operations came in at $1.02, surpassing the Zacks Consensus Estimate of 97 cents. Earnings improved 13.3% from the year-ago quarter figure of 90 cents.

Fidelity’s results reflect higher revenues and lower expenses. Further, the company raised its 2017 earnings per share guidance.

Net earnings were $132 million or 40 cents in the reported quarter compared with $121 million or 36 cents in the prior-year quarter.

Revenues Increase, Expenses Decline

Revenues of $2.34 billion jumped 1.5% year over year but lagged the Zacks Consensus Estimate of $2.35 billion.

Organic revenue growth was 2.3% in the quarter.

Selling, general and administrative expenses came in at $370 million, down 12.3% year over year.

Segment wise, Integrated Financial Solutions’ revenues grew 2.5% year over year to $1.18 billion. Revenues from Global Financial Solutions were up 2.7% to $1.08 billion.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) grew 7.2% year over year to $746 million while EBITDA margin was 31.8%.

Balance Sheet & Cash Flow

As of Jun 30, 2017, cash and cash equivalents were $786 million compared with $683 million as of Dec 31, 2016. Debt outstanding was nearly $9.7 billion.

In the quarter, net cash provided by operations was $74 million and free cash flow was $275 million.

Fidelity paid dividends worth $97 million in the quarter.

Share Repurchase Update

The company announced the approval of $4 billion share repurchase program by the board of directors, effective through Dec 31, 2020.

Guidance for 2017

Fidelity expects organic revenue growth to be in the range of 2–3% while reported revenue growth is expected to remain stable or decline 1%.

Adjusted earnings per share are expected to be in the band of $4.22–$4.32 compared with $4.15–$4.30 previously provided by the company.

Adjusted EBITDA is expected in the range of $3.03–$3.08 billion.

Our Take

Fidelity enjoys a dominant position in financial and payments solutions business, backed by its robust product portfolio. We believe that the company is well positioned to benefit from increasing investment in mobile banking. However, increasing consolidation in the banking sector, challenging environment for the Payments Solutions business and an uncertain regulatory environment are the primary headwinds.

Fidelity National Information Services, Inc. Price and EPS Surprise

Currently, Fidelity has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Stocks

Ameriprise Financial Inc.’s (AMP - Free Report) second-quarter 2017 operating earnings per share of $2.80 comfortably surpassed the Zacks Consensus Estimate of $2.62. Also, the figure represents a year-over-year increase of 26%.

First Horizon National Corporation (FHN - Free Report) reported second-quarter 2017 adjusted earnings per share of 27 cents, surpassing the Zacks Consensus Estimate by a penny. Further, the figure reflects an increase of 12.5% from the year-ago quarter.

BlackRock, Inc. (BLK - Free Report) reported second-quarter 2017 adjusted earnings of $5.24 per share, which lagged the Zacks Consensus Estimate of $5.39. However, the bottom line came in 10% higher than the year-ago quarter.

"More Stock News: Tech Opportunity Worth $386 Billion in 2017”                

From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future.

Zacks has released a brand-new Special Report to help you take advantage of this exciting investment opportunity.  Most importantly, it reveals 4 stocks with massive profit potential. See these stocks now>>

Published in