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Here's Why Investors Should Hold on to Fiserv (FISV) Stock
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Shares of Fiserv, Inc. have gained 18.2% over the past three months, significantly outperforming 4.9% rally of the industry it belongs to and 7.9% growth of the Zacks S&P 500 composite.
The company has an expected long-term earnings per share (three to five years) growth rate of 15.9%. Further, earnings are anticipated to register 10.8% growth in 2020 and 21.1% in 2021.
Factors Behind the Rally
Fiserv continues to focus on improving product and service quality through leveraging its size and scale of operations, reducing costs and effectively integrating First Data operations. The company is streamlining its overall cost structure through rationalization of duplicate costs to attain planned cost synergies.
Fiserv continues to expand its product portfolio through strategic acquisitions. In 2020, the company completed the acquisitions of MerchantPro Express, Bypass Mobile and Inlet. While MerchantPro expands the company’s merchant services business, Bypass enhances its omni-commerce capabilities and Inlet boosts its digital bill payment strategy.
Fiserv has been consistent with share repurchases. During 2019, the company repurchased 4.2 million shares for $394 million. In 2018 and 2017, the company had repurchased shares worth $1.91 billion and $1.17 billion, respectively. Such moves instill investors’ confidence and positively impacting earnings per share.
Some Risks
Fiserv’s total debt to total capital ratio of 0.40 was higher than the industry’s 0.39 at the end of third-quarter 2020. A higher debt to capitalization ratio indicates higher risk of insolvency in challenging times.
Further, the company’s cash and cash equivalent of $937 million at the end of the quarter was well below the long-term debt level of $20.9 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. The cash level, however, can meet the short-term debt of $365 million.
Long-term earnings (three to five years) growth rate for Republic Services, Gartner and Insperity is estimated at 9.4%, 13.5% and 15%, respectively.
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Here's Why Investors Should Hold on to Fiserv (FISV) Stock
Shares of Fiserv, Inc. have gained 18.2% over the past three months, significantly outperforming 4.9% rally of the industry it belongs to and 7.9% growth of the Zacks S&P 500 composite.
The company has an expected long-term earnings per share (three to five years) growth rate of 15.9%. Further, earnings are anticipated to register 10.8% growth in 2020 and 21.1% in 2021.
Factors Behind the Rally
Fiserv continues to focus on improving product and service quality through leveraging its size and scale of operations, reducing costs and effectively integrating First Data operations. The company is streamlining its overall cost structure through rationalization of duplicate costs to attain planned cost synergies.
Fiserv continues to expand its product portfolio through strategic acquisitions. In 2020, the company completed the acquisitions of MerchantPro Express, Bypass Mobile and Inlet. While MerchantPro expands the company’s merchant services business, Bypass enhances its omni-commerce capabilities and Inlet boosts its digital bill payment strategy.
Fiserv has been consistent with share repurchases. During 2019, the company repurchased 4.2 million shares for $394 million. In 2018 and 2017, the company had repurchased shares worth $1.91 billion and $1.17 billion, respectively. Such moves instill investors’ confidence and positively impacting earnings per share.
Some Risks
Fiserv’s total debt to total capital ratio of 0.40 was higher than the industry’s 0.39 at the end of third-quarter 2020. A higher debt to capitalization ratio indicates higher risk of insolvency in challenging times.
Further, the company’s cash and cash equivalent of $937 million at the end of the quarter was well below the long-term debt level of $20.9 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. The cash level, however, can meet the short-term debt of $365 million.
Zacks Rank and Stocks to Consider
Fiserv currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Republic Services (RSG - Free Report) , Gartner (IT - Free Report) and Insperity (NSP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
Long-term earnings (three to five years) growth rate for Republic Services, Gartner and Insperity is estimated at 9.4%, 13.5% and 15%, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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