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Fidelity (FIS) Q1 Earnings Beat Estimates, Revenues Rise Y/Y

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Fidelity National Information Services’ (FIS - Free Report) first-quarter 2020 adjusted earnings per share from continuing operations were $1.28, surpassing the Zacks Consensus Estimate by a penny. Also, the bottom line compared favorably with the year-ago quarter figure of $1.16.

Organic revenue growth and expanding margin were the key tailwinds. Also, strong liquidity position aided. However, a significant rise in expenses posed a key concern.

On a GAAP basis, the company reported net earnings attributable to common stockholders of $15 million or 2 cents per share compared with $148 million or 45 cents in the prior-year quarter.

Organic Revenues Increase, Expenses Flare Up

GAAP revenues in the quarter were $3.08 billion, up 50% year over year. The figure met the Zacks Consensus Estimate.

Organic revenues went up nearly 2% in the quarter.

Selling, general and administrative expenses were $881 million, up significantly year over year.

Segment wise, Merchant Solutions’ GAAP revenues grew to $935 million from $50 million in the year-ago quarter. Revenues from Banking Solutions rose 6% to $1.46 million. Capital Market Solutions’ revenues climbed 10% to $631 million.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased to $1.25 billion from $729 million in the year-ago quarter. Adjusted EBITDA margin expanded 510 basis points to 40.5%.

Balance Sheet & Cash Flow

As of Mar 31, 2020, cash and cash equivalents were $1.37 billion compared with $1.15 billion as of Dec 31, 2019. Debt outstanding was $20.4 billion.

In the first quarter, net cash provided by operations was $383 million and free cash flow nearly doubled from the prior-year quarter to $539 million.

The company paid out dividends worth $216 million in the reported quarter.

Our Viewpoint

Fidelity reported a decent quarter, with higher organic revenues and strong liquidity position. The company enjoys a dominant position in financial and payments solutions business, backed by a robust product portfolio. 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 National Information Services Inc Price, Consensus and EPS Surprise

 

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 Banks

LendingTree (TREE - Free Report) reported first-quarter 2020 adjusted net income per share of $1.20, beating the Zacks Consensus Estimate of $1.09. Further, the figure was higher than the prior-year quarter’s $1.10 per share.

Hercules Capital Inc.’s (HTGC - Free Report) first-quarter 2020 net investment income of 37 cents per share outpaced the Zacks Consensus Estimate by a penny. The bottom line also grew 23.3% from the year-ago reported figure.

Ares Capital Corporation’s (ARCC - Free Report) first-quarter 2020 core earnings of 41 cents per share missed the Zacks Consensus Estimate of 43 cents. Also, the bottom line declined 14.6% year over year.

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