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Fidelity National Information Services’ (FIS - Free Report) second-quarter 2020 adjusted earnings per share from continuing operations were $1.15, surpassing the Zacks Consensus Estimate of $1.10. The bottom line, however, compared unfavorably with the year-ago quarter figure of $1.30.
Strong liquidity position and expanding margin were the key tailwinds. However, a rise in expenses posed a key concern. Also, a fall in organic revenues was a headwind.
On a GAAP basis, the company reported net earnings attributable to common stockholders of $19 million or 3 cents per share compared with $154 million or 47 cents per share in the prior-year quarter.
Organic Revenues Decline, Expenses Flare Up
GAAP revenues in the quarter were $2.96 billion, up 40% year over year. The upside mainly stemmed from the acquisition of Worldpay. Also, the figure surpassed the Zacks Consensus Estimate of $2.89m million.
Organic revenues declined nearly 7% in the quarter primarily due to reduced consumer spending trends caused by shelter-in-place, lockdown orders and other impacts of the COVID-19 pandemic.
Selling, general and administrative expenses were $870 million, up significantly from $317 million in the year-ago quarter.
Segment wise, Merchant Solutions’ GAAP revenues grew to $812 million from $97 million in the year-ago quarter. Revenues from Banking Solutions rose 9% to $1.48 million. Capital Market Solutions’ revenues rose 6% to $629 million.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased to $1.16 billion from $794 million in the year-ago quarter. Adjusted EBITDA margin expanded 150 basis points to 39.1%.
Balance Sheet & Cash Flow
As of Jun 30, 2020, cash and cash equivalents were $1.18 billion compared with $1.15 billion as of Dec 31, 2019. Debt outstanding was $19.9 billion.
In the second quarter, net cash provided by operations was $1.23 billion and free cash flow increased 58.6% from the prior-year quarter to $655 million.
The company paid out dividends worth $217 million in the reported quarter.
Our Viewpoint
Fidelity’s dominant position in financial and payments solutions business, backed by a robust product portfolio, keeps us encouraged. Notably, the merger of Fidelity and Worldpay will provide clients of both organizations access to a wider portfolio of digital assets for accelerating revenue growth.
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
Cullen/Frost Bankers, Inc. (CFR - Free Report) reported second-quarter 2020 earnings per share of $1.47, which handily surpassed the Zacks Consensus Estimate of 71 cents. However, it compares unfavorably with the prior-year quarter figure of $1.72 per share.
Credit Acceptance Corporation (CACC - Free Report) reported second-quarter 2020 earnings of $5.40 per share, beating the Zacks Consensus Estimate of $4.65. The company recorded earnings of $8.68 per share in the prior-year quarter. Notably, the figure includes certain non-recurring items.
New York Community Bancorp, Inc. (NYCB - Free Report) reported second-quarter 2020 earnings per share of 21 cents, which surpassed the Zacks Consensus Estimate of 19 cents. Also, the figure compared favorably with the prior-year quarter figure of 19 cents.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Fidelity (FIS) Q2 Earnings Beat Estimates, Expenses Increase
Fidelity National Information Services’ (FIS - Free Report) second-quarter 2020 adjusted earnings per share from continuing operations were $1.15, surpassing the Zacks Consensus Estimate of $1.10. The bottom line, however, compared unfavorably with the year-ago quarter figure of $1.30.
Strong liquidity position and expanding margin were the key tailwinds. However, a rise in expenses posed a key concern. Also, a fall in organic revenues was a headwind.
On a GAAP basis, the company reported net earnings attributable to common stockholders of $19 million or 3 cents per share compared with $154 million or 47 cents per share in the prior-year quarter.
Organic Revenues Decline, Expenses Flare Up
GAAP revenues in the quarter were $2.96 billion, up 40% year over year. The upside mainly stemmed from the acquisition of Worldpay. Also, the figure surpassed the Zacks Consensus Estimate of $2.89m million.
Organic revenues declined nearly 7% in the quarter primarily due to reduced consumer spending trends caused by shelter-in-place, lockdown orders and other impacts of the COVID-19 pandemic.
Selling, general and administrative expenses were $870 million, up significantly from $317 million in the year-ago quarter.
Segment wise, Merchant Solutions’ GAAP revenues grew to $812 million from $97 million in the year-ago quarter. Revenues from Banking Solutions rose 9% to $1.48 million. Capital Market Solutions’ revenues rose 6% to $629 million.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased to $1.16 billion from $794 million in the year-ago quarter. Adjusted EBITDA margin expanded 150 basis points to 39.1%.
Balance Sheet & Cash Flow
As of Jun 30, 2020, cash and cash equivalents were $1.18 billion compared with $1.15 billion as of Dec 31, 2019. Debt outstanding was $19.9 billion.
In the second quarter, net cash provided by operations was $1.23 billion and free cash flow increased 58.6% from the prior-year quarter to $655 million.
The company paid out dividends worth $217 million in the reported quarter.
Our Viewpoint
Fidelity’s dominant position in financial and payments solutions business, backed by a robust product portfolio, keeps us encouraged. Notably, the merger of Fidelity and Worldpay will provide clients of both organizations access to a wider portfolio of digital assets for accelerating revenue growth.
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 National Information Services, Inc. price-consensus-eps-surprise-chart | Fidelity National Information Services, Inc. Quote
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
Cullen/Frost Bankers, Inc. (CFR - Free Report) reported second-quarter 2020 earnings per share of $1.47, which handily surpassed the Zacks Consensus Estimate of 71 cents. However, it compares unfavorably with the prior-year quarter figure of $1.72 per share.
Credit Acceptance Corporation (CACC - Free Report) reported second-quarter 2020 earnings of $5.40 per share, beating the Zacks Consensus Estimate of $4.65. The company recorded earnings of $8.68 per share in the prior-year quarter. Notably, the figure includes certain non-recurring items.
New York Community Bancorp, Inc. (NYCB - Free Report) reported second-quarter 2020 earnings per share of 21 cents, which surpassed the Zacks Consensus Estimate of 19 cents. Also, the figure compared favorably with the prior-year quarter figure of 19 cents.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>