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Fidelity (FIS) Q1 Earnings Beat Estimates, Revenues Rise

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Fidelity National Information Services’ (FIS - Free Report) first-quarter 2021 adjusted earnings per share from continuing operations were $1.30, surpassing the Zacks Consensus Estimate of $1.25. Also, the bottom line compared favorably with the year-ago quarter figure of $1.28.

Strong liquidity position and expanding margin were the key tailwinds. Also, decline in expenses was a positive. However, flat organic revenues posed a key concern.

On a GAAP basis, the company reported net loss attributable to common stockholders of $373 million or 60 cents per share against net earnings of $15 million or 2 cents per share in the prior-year quarter.

Organic Revenues Rise, Expenses Increase

GAAP revenues in the quarter were $3.22 billion, up 5% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $3.16 billion. Organic revenues increased 4% in the quarter, on higher growth across all three operating segments.

Selling, general and administrative expenses were $1 billion, up 14.2% from $881 million in the year-ago quarter.

Segment wise, Merchant Solutions’ GAAP revenues climbed 3% to $966 million. Revenues from Banking Solutions rose 7% to $1.54 million. Capital Market Solutions’ revenues jumped 5% to $625 million.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased to $1.31 billion from $1.25 billion in the year-ago quarter. Adjusted EBITDA margin expanded 10 basis points to 40.6%.

Balance Sheet & Cash Flow

As of Mar 31, 2021, cash and cash equivalents were $1.04 billion compared with $1.96 billion as of Dec 31, 2020. Debt outstanding was $19.4 billion.

In the first quarter, net cash provided by operations was $836 million, and the company reported free cash flow of $556 million.

The company paid out dividends worth $244 million in the reported quarter and repurchased approximately 2.8 million shares for $400 million at an average price of $143.01 per share.

Guidance

Second Quarter

Fidelity expects GAAP revenues to be between $3.37 billion and $3.39 billion. The company expects to report net earnings between 55 cents per share and 65 cents. Adjusted earnings per share are expected to be in the band of $1.52-$1.55.

Full Year

For 2021, GAAP revenues are projected to be between $13.7 billion and $13.8 billion. The company expects to report net earnings of $1.30 per share to $1.60. Adjusted earnings per share are expected to be in the band of $6.35-$6.55.

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 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 Companies

New York Community Bancorp, Inc. (NYCB - Free Report) posted first-quarter 2021 earnings per share of 29 cents, inching past the Zacks Consensus Estimate of 27 cents. The figure also compares favorably with the prior-year quarter figure of 20 cents.

East West Bancorp’s (EWBC - Free Report) first-quarter 2021 earnings per share of $1.44 outpaced the Zacks Consensus Estimate of $1.23. Also, the figure is up 44% from the prior-year quarter.

Cullen/Frost Bankers, Inc. (CFR - Free Report) reported first-quarter 2021 earnings per share of $1.77, which handily surpassed the Zacks Consensus Estimate of $1.42. Also, it compared favorably with the prior-year quarter figure of 75 cents.

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