On Nov 15, we issued an updated research report on Fidelity National Information Services, Inc. (FIS - Free Report) . The company is benefiting from solid organic growth and evolving digital platforms like mobile banking. However, intense competition and high debt level keep us apprehensive.
Fidelity National’s shares have gained 23.2% year to date, underperforming the industry’s rally of 33.6%.
Also, the company’s Zacks Consensus Estimate for 2017 has been revised 2.8% upward in the last 30 days. Currently, the stock carries a Zacks Rank #3 (Hold).
The company has witnessed an impressive compound annual growth rate of 12.4% in the last five years (ended 2016) on the back of its strong market position and broad customer base. Also, its initiatives such as digitization encourage us. Further, Fidelity National expects organic revenues to grow 2-3% in 2017.
Also, Fidelity National’s investments in mobile banking and innovative products such as PayNet and BuyWay are expected to offer significant growth opportunities for the long term.
However, the company’s balance sheet seems leveraged. Despite its efforts to reduce the debt level, Fidelity National had outstanding debt of about $9.1 billion as of Sep 30, 2017. This is likely to restrict the company’s future expansion plans and mar profitability.
Moreover, the company is exposed to significant competition from the new entrants along with the existing, well-experienced peers.
Stocks to Consider
Some better-ranked stocks in the same space are Western Union Company (WU - Free Report) , Total System Services (TSS - Free Report) and Visa (V - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Western Union witnessed an upward earnings estimate revision of 5.2%, over the past 60 days.
Total System Services’ earnings estimates moved upward by 1.8% over the past 60 days, for the current year.
Visa’s current-year earnings estimates were revised 1.5% upward, over the past 60 days.
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