Back to top

Image: Bigstock

Fidelity National (FIS) Q4 Earnings Beat, Revenues Increase

Read MoreHide Full Article

Fidelity National Information Services’ (FIS - Free Report) fourth-quarter 2019 adjusted earnings per share from continuing operations came in at $1.57, surpassing the Zacks Consensus Estimate of $1.54. However, the bottom line compared unfavorably with the year-ago quarter figure of $1.60.

Organic revenue growth and expanding margin were the key tailwinds. Also, strong liquidity position was a positive factor. However, significant rise in expenses posed a key concern.

On a GAAP basis, the company reported net loss attributable to common stockholders of $158 million or 26 cents against net earnings $299 million or 91 cents in the prior-year quarter.

In full-year 2019, adjusted net earnings attributable to common stockholders came in at $2.5 billion or $5.61 per share compared with $1.7 billion or $5.23 per share in the prior year. The Zacks Consensus Estimate was pegged at $5.51.

Organic Revenues Increase, Expenses Up

GAAP revenues in the quarter came in at $3.34 billion, up 54% year over year. The figure topped the consensus estimate of $3.33 billion.

In 2019, the company reported GAAP revenues of $10.3 billion, up 23% year over year. Also, it matched with the Zacks Consensus Estimate.

Organic revenues went up nearly 7% in the quarter.

Selling, general and administrative expenses were $1.23 billion, up significantly year over year.

Segment wise, Merchant Solutions’ GAAP revenues grew to $1.12 billion, and revenues from Banking Solutions rose 6% to $1.56 million. Capital Market Solutions’ revenues climbed 8% to $669 million.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased to $1.49 billion from $864 million in year-ago quarter. Adjusted EBITDA margin expanded 470 basis points to 44.6%.

Balance Sheet & Cash Flow

As of Dec 31, 2019, cash and cash equivalents were $1.15 billion compared with $703 million as of Dec 31, 2018. Debt outstanding was nearly $20.2 billion.

In the fourth quarter, net cash provided by operations was $670 million and free cash flow nearly doubled from the prior-year quarter to $812 million.

Fidelity paid dividends worth $215 million in the reported quarter. In 2019, the company paid dividends worth $656 million.

2020 Guidance

First Quarter

Fidelity expects GAAP revenues to be between $3.18 billion and $3.21 billion. The company expects to report between net loss of 15 cents per share and breakeven. Adjusted earnings per share are expected to be in the band of $1.30-$1.34.

Full Year

For 2020, GAAP revenues are projected to be between $13.5 billion and $13.7 billion. The company expects to report net earnings of 50 cents per share to $1.30. Adjusted earnings per share are expected to be in the band of $6.17-$6.35         .

Our Viewpoint

Fidelity reported a decent quarter with higher organic revenues and strong liquidity position. The company enjoys a dominant position in financial and payments solutions business, backed by a robust product portfolio. We believe the company is well positioned to benefit from increasing investments in digitization.

Notably, the merger of Fidelity and Worldpay, which are leaders in their respective markets in modernization investments, will provide clients of both organizations access to a wider portfolio of digital assets for accelerating revenue growth, streamlining operations and creating better engagement with customers.

However, increasing consolidation in the banking sector, a challenging environment for the Payments Solutions business and an uncertain regulatory environment are key headwinds.

Fidelity National Information Services, Inc. Price, Consensus and EPS Surprise

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

Performance of Other Banks

Credit Acceptance Corporation’s (CACC - Free Report) fourth-quarter 2019 earnings of $8.60 per share missed the Zacks Consensus Estimate of $8.96. However, the bottom line was up 10.4% year over year. Notably, the figure includes certain non-recurring items.

Hilltop Holdings Inc.’s (HTH - Free Report) fourth-quarter 2019 earnings per share of 54 cents lagged the Zacks Consensus Estimate of 56 cents. However, the bottom line compared favorably with the prior-year quarter’s earnings of 30 cents.

SEI Investments Co.’s (SEIC - Free Report) fourth-quarter 2019 earnings of 84 cents per share lagged the Zacks Consensus Estimate of 86 cents. However, the figure reflects a rise of 15.1% from the prior-year quarter.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Published in