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Is Fidelity National a Suitable Stock for Value Investors Now?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Fidelity National Information Services, Inc. (FIS - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Fidelity National has a trailing twelve months PE ratio of 20.5, as you can see in the chart below
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 25.3. If we focus on the long-term PE trend, Fidelity National’s current PE level puts it below its midpoint over the past five years.
Image Source: Zacks Investment Research
Further, the stock’s PE also compares favorably with its sector’s trailing twelve months PE ratio, which stands at 33.3. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
Image Source: Zacks Investment Research
We should also point out that Fidelity National has a forward PE ratio (price relative to this year’s earnings) of just 18.6, so it is fair to say that a slightly more value-oriented path may be ahead for Fidelity National stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate). The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Fidelity National’s PEG ratio stands at just 1.1, compared with the sector’s average of 1.8. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Image Source: Zacks Investment Research
Broad Value Outlook
In aggregate, Fidelity National currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Fidelity National a solid choice for value investors, and other key metrics makes this pretty clear too.
For example- the P/CF ratio (another great indicator of value) comes in at 10.6, (which is somewhat better than the industry average of 15.8). Clearly, FIS is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Fidelity National might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of B and a Momentum Score of F. This gives FIS a Zacks VGM score — or its overarching fundamental grade — of C. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at its best. The current quarter has seen one estimate go higher while 10 estimates moved down in the past sixty days and the full year has seen 11 estimates go higher and one lower.
Thus, the consensus estimate for the current quarter has moved down 1.7% in the past two months, while the full year estimate has improved by 0.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Fidelity National Information Services, Inc. Price and Consensus
The stock holds a Zacks Rank #3 (Hold), which indicates that while analysts have some apprehensions about the stock in the immediate future, the stock’s growth story might be good over the long term. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
Fidelity National is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (top 49%) further supports the growth potential of the stock. However, with a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the sector has underperformed the broader market, as you can see below:
Image Source: Zacks Investment Research
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is Fidelity National a Suitable Stock for Value Investors Now?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Fidelity National Information Services, Inc. (FIS - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Fidelity National has a trailing twelve months PE ratio of 20.5, as you can see in the chart below
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 25.3. If we focus on the long-term PE trend, Fidelity National’s current PE level puts it below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with its sector’s trailing twelve months PE ratio, which stands at 33.3. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Fidelity National has a forward PE ratio (price relative to this year’s earnings) of just 18.6, so it is fair to say that a slightly more value-oriented path may be ahead for Fidelity National stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate). The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Fidelity National’s PEG ratio stands at just 1.1, compared with the sector’s average of 1.8. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Fidelity National currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Fidelity National a solid choice for value investors, and other key metrics makes this pretty clear too.
For example- the P/CF ratio (another great indicator of value) comes in at 10.6, (which is somewhat better than the industry average of 15.8). Clearly, FIS is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Fidelity National might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of B and a Momentum Score of F. This gives FIS a Zacks VGM score — or its overarching fundamental grade — of C. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at its best. The current quarter has seen one estimate go higher while 10 estimates moved down in the past sixty days and the full year has seen 11 estimates go higher and one lower.
Thus, the consensus estimate for the current quarter has moved down 1.7% in the past two months, while the full year estimate has improved by 0.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Fidelity National Information Services, Inc. Price and Consensus
Fidelity National Information Services, Inc. price-consensus-chart | Fidelity National Information Services, Inc. Quote
The stock holds a Zacks Rank #3 (Hold), which indicates that while analysts have some apprehensions about the stock in the immediate future, the stock’s growth story might be good over the long term. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
Fidelity National is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (top 49%) further supports the growth potential of the stock. However, with a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the sector has underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.