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Fiserv (FI) Up 9.9% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Fiserv (FI - Free Report) . Shares have added about 9.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fiserv due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fiserv Beat on Q3 Estimates
Fiserv, Inc. reported impressive third-quarter 2023 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share (excluding 40 cents from non-recurring items) of $1.96 exceeded the consensus mark by 1% and increased 20% year over year. Adjusted revenues of $4.62 billion surpassed the consensus estimate by 0.53% and rose 8.2% year over year.
Organic revenue growth was 12% in the quarter, driven by 20% and 6% growth in the Acceptance and Payments segments, respectively.
Other Quarterly Details
Processing and services’ revenues of $4 billion increased 8.7% year over year and beat our estimate by 2.3%. Revenues in the Product segment were $865 million, up 3% year over year but missing our estimated $901.6 million.
Revenues from Merchant Acceptance were $2.11 billion, up 12.2% from the year-ago figure, beating our estimate by 4.5%. The Fintech segment reported revenues of $795 million, indicating a 3.8% rise from our estimate. The Payments segment reported revenues of $1.71 billion, reflecting growth of 5.6%. The figure compares with our estimated $1.7 billion.
The operating margin from the Merchant acceptance segment was 35.9%, up from the yea-r-ago figure of 32.4% and our estimated 35.2%. Adjusted operating margin from the Payments segment was 48.6% compared with the year-ago figure of 45.9% and surpassed our estimated 42%. Operating margin from the Fintech segment was 36.7%, up 260 basis points from the year-ago figure.
Balance Sheet and Cash Flow
Fiserv exited the third quarter of 2023 with cash and cash equivalents of $1.35 billion. Long-term debt was $21.9 billion. FISV generated $1.55 billion in net cash from operating activities, while free cash flow was $1.25 billion. Capital expenditures were $355 million. The company repurchased 9.6 million shares for $1.2 billion in the quarter.
2023 Guidance
Adjusted earnings per share are anticipated to be in the range of $7.47-$7.52, raised from prior guidance of EPS of $7.4-$7.5.
The company anticipates the EPS growth to be in the band of 15-16%. FI expects total revenues to grow by 7.5% while organic revenues are expected to grow 11% year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Fiserv has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Fiserv has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Fiserv belongs to the Zacks Financial Transaction Services industry. Another stock from the same industry, Equifax (EFX - Free Report) , has gained 28.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Equifax reported revenues of $1.32 billion in the last reported quarter, representing a year-over-year change of +6%. EPS of $1.76 for the same period compares with $1.73 a year ago.
For the current quarter, Equifax is expected to post earnings of $1.78 per share, indicating a change of +17.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
Equifax has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Fiserv (FI) Up 9.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Fiserv (FI - Free Report) . Shares have added about 9.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fiserv due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fiserv Beat on Q3 Estimates
Fiserv, Inc. reported impressive third-quarter 2023 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share (excluding 40 cents from non-recurring items) of $1.96 exceeded the consensus mark by 1% and increased 20% year over year. Adjusted revenues of $4.62 billion surpassed the consensus estimate by 0.53% and rose 8.2% year over year.
Organic revenue growth was 12% in the quarter, driven by 20% and 6% growth in the Acceptance and Payments segments, respectively.
Other Quarterly Details
Processing and services’ revenues of $4 billion increased 8.7% year over year and beat our estimate by 2.3%. Revenues in the Product segment were $865 million, up 3% year over year but missing our estimated $901.6 million.
Revenues from Merchant Acceptance were $2.11 billion, up 12.2% from the year-ago figure, beating our estimate by 4.5%. The Fintech segment reported revenues of $795 million, indicating a 3.8% rise from our estimate. The Payments segment reported revenues of $1.71 billion, reflecting growth of 5.6%. The figure compares with our estimated $1.7 billion.
The operating margin from the Merchant acceptance segment was 35.9%, up from the yea-r-ago figure of 32.4% and our estimated 35.2%. Adjusted operating margin from the Payments segment was 48.6% compared with the year-ago figure of 45.9% and surpassed our estimated 42%. Operating margin from the Fintech segment was 36.7%, up 260 basis points from the year-ago figure.
Balance Sheet and Cash Flow
Fiserv exited the third quarter of 2023 with cash and cash equivalents of $1.35 billion. Long-term debt was $21.9 billion. FISV generated $1.55 billion in net cash from operating activities, while free cash flow was $1.25 billion. Capital expenditures were $355 million. The company repurchased 9.6 million shares for $1.2 billion in the quarter.
2023 Guidance
Adjusted earnings per share are anticipated to be in the range of $7.47-$7.52, raised from prior guidance of EPS of $7.4-$7.5.
The company anticipates the EPS growth to be in the band of 15-16%. FI expects total revenues to grow by 7.5% while organic revenues are expected to grow 11% year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Fiserv has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Fiserv has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Fiserv belongs to the Zacks Financial Transaction Services industry. Another stock from the same industry, Equifax (EFX - Free Report) , has gained 28.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Equifax reported revenues of $1.32 billion in the last reported quarter, representing a year-over-year change of +6%. EPS of $1.76 for the same period compares with $1.73 a year ago.
For the current quarter, Equifax is expected to post earnings of $1.78 per share, indicating a change of +17.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
Equifax has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.