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Here's Why Investors Should Hold on to Fiserv (FISV) Stock

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Fiserv, Inc. (FISV - Free Report) has an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of quality and sustainability of its growth.

The company has an expected long-term earnings per share (three to five years) growth rate of 16.5%. Its earnings are expected to increase 22.4% in 2021 and 17.4% in 2022. The stock has gained 27.7% in the past six months.

 

Factors That Bode Well

Fiserv has been consistent with share repurchases. During 2020, Fiserv repurchased 16.1 million shares for $1.64 billion. 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 impact earnings per share.

Fiserv continues to expand its product portfolio through strategic acquisitions. The recent acquisition of Ondot Systems is expected to enhance its digital capabilities, strengthening its competitive position.

The company remains focused on streamlining its overall cost structure through rationalization of duplicate costs to attain planned cost synergies. It had implemented more than $1 billion of cost savings by December 2020.

Risks Associated

Fiserv’s total-debt-to-total-capital ratio of 0.39 was higher than the industry’s 0.38 at the end of fourth-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 $906 million at the end of the quarter was well below the long-term debt level of $20.3 billion. This indicates that the company doesn’t have enough cash to meet this debt burden. However, the cash level can meet the short-term debt of $384 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 The Interpublic Group of Companies (IPG - Free Report) , Cross Country Healthcare (CCRN - Free Report) and NV5 Global (NVEE - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for Interpublic, Cross Country Healthcare and NV5 Global is pegged at 2.4%, 12% and 16.9%, respectively.

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