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Here's Why You Should Retain Fidelity National (FIS) Stock Now
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Fidelity National Information Services, Inc. (FIS - Free Report) is expected to benefit on the back of its Future Forward initiative, cross-selling efforts, vertical expansion, and margin expansion. The growing global e-commerce market holds tremendous opportunity for the company.
Fidelity National — with a market cap of $41.9 billion — provides banking and payments technology solutions, processing services, and information-based services to the financial services industry. Courtesy of solid prospects, this stock is worth holding on to at the moment.
Zacks Rank & Price Performance
FIS currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 43.4% compared with the industry’s rise of 17.9%.
Image Source: Zacks Investment Research
Rising Estimates
The Zacks Consensus Estimate for FIS’ 2024 earnings per share is pegged at $4.97, indicating a 47.5% increase from the year-ago estimated figure. Revenues are expected to be around $10.1 billion in 2024. The company beat earnings in two of the last four quarters and missed twice.
Key Tailwinds
Fidelity National is benefiting from strong recurring revenue growth across all its segments. Acceleration in new sales and focus on high-growth areas should continue to fuel top-line growth in the Banking Segment. The company expects banking-adjusted revenues to grow between 3% and 3.5% in 2024. Moreover, the recent banking uncertainty is boding well for FIS, leading to growth in accounts on file serviced on its platforms and, hence, rising banking revenues. Growth in existing clients, the contribution of high-growth products, and tuck-in acquisitions are expected to fuel revenue growth in the range of 3.5-4.5% in the medium term. Cross-selling of banking products to capital markets clients highlights a $300 million revenue opportunity, posing the segment well for growth.
The company continues to benefit from increasing Capital Market revenues in the first quarter of 2024. It expects revenues in this segment to grow in the range of 6.5-7% in 2024. The company’s continued innovation in componentized SaaS-enabled solutions and higher exposure to new client verticals bode well. Expanding into the non-core sub-segment, which accounts for 30% of the total segment’s revenues, bodes well. Management expects medium-term revenue growth of 7.5-8.5%. The company sees a $100 million opportunity to cross-sell Capital Market products to Banking Solutions clients.
The company focuses on top-tier strategic partnerships and future-proof underlying technologies to grow its operations. The company’s growing footprint in the crypto market is praiseworthy. It has partnered with cryptocurrency platforms like Crypto.com and OKCoin to support their respective global expansions. Further, its partnership with bitcoin-focused financial services and technology provider NYDIG is likely to increase traffic to its Digital One Mobile application. Moreover, an upgraded version of its mobile banking application bodes well. It recently launched Atelio to enable clients to embed financial services in their offerings. It expects embedded finance TAM’s revenues to be around $230 billion by 2025.
In the first quarter, Fidelity National returned $1.4 billion to shareholders in the form of share repurchases and $209 million in the form of dividends. Management aims to return at least $4 billion to its shareholders through share buybacks by the end of 2024. The company aims to maintain a 35% dividend payout ratio in 2024. It has a dividend yield of 1.9%, higher than the industry’s average of 0.8%.
The company does not move away from shedding non-core assets to boost efficiency and profitability. It completed a majority stake divestiture in Worldpay in the first quarter of 2024.
However, there are a few factors that investors should keep an eye on. The company is undertaking a multi-year modernization initiative for its platforms and applications following the successful consolidation of data centers and the modernization of its IT infrastructure. These upgrades are likely to result in increased costs in the short term. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
The Zacks Consensus Estimate for MoneyLion’s current-year bottom line indicates a 131.3% year-over-year improvement. The consensus estimate for ML’s current-year top line is pegged at $524.8 million, suggesting 23.9% year-over-year growth.
The Zacks Consensus Estimate for Global Payments’ 2024 earnings is currently pegged at $11.63 per share, indicating 11.6% year-over-year growth. It beat estimates in each of the past four quarters with an average surprise of 1.1%. The consensus mark for GPN’s revenues of $9.2 billion suggests a 6.5% increase from the year-ago level.
The Zacks Consensus Estimate for ENV 2024 earnings of $2.62 per share suggests 23.6% year-over-year growth. It beat earnings estimates thrice in the past four quarters and met once, with an average surprise of 9.4%. The consensus estimate for ENV’s current-year revenues is pegged at $1.4 billion, a 9.6% increase from a year ago.
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Here's Why You Should Retain Fidelity National (FIS) Stock Now
Fidelity National Information Services, Inc. (FIS - Free Report) is expected to benefit on the back of its Future Forward initiative, cross-selling efforts, vertical expansion, and margin expansion. The growing global e-commerce market holds tremendous opportunity for the company.
Fidelity National — with a market cap of $41.9 billion — provides banking and payments technology solutions, processing services, and information-based services to the financial services industry. Courtesy of solid prospects, this stock is worth holding on to at the moment.
Zacks Rank & Price Performance
FIS currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 43.4% compared with the industry’s rise of 17.9%.
Image Source: Zacks Investment Research
Rising Estimates
The Zacks Consensus Estimate for FIS’ 2024 earnings per share is pegged at $4.97, indicating a 47.5% increase from the year-ago estimated figure. Revenues are expected to be around $10.1 billion in 2024. The company beat earnings in two of the last four quarters and missed twice.
Key Tailwinds
Fidelity National is benefiting from strong recurring revenue growth across all its segments. Acceleration in new sales and focus on high-growth areas should continue to fuel top-line growth in the Banking Segment. The company expects banking-adjusted revenues to grow between 3% and 3.5% in 2024. Moreover, the recent banking uncertainty is boding well for FIS, leading to growth in accounts on file serviced on its platforms and, hence, rising banking revenues. Growth in existing clients, the contribution of high-growth products, and tuck-in acquisitions are expected to fuel revenue growth in the range of 3.5-4.5% in the medium term. Cross-selling of banking products to capital markets clients highlights a $300 million revenue opportunity, posing the segment well for growth.
The company continues to benefit from increasing Capital Market revenues in the first quarter of 2024. It expects revenues in this segment to grow in the range of 6.5-7% in 2024. The company’s continued innovation in componentized SaaS-enabled solutions and higher exposure to new client verticals bode well. Expanding into the non-core sub-segment, which accounts for 30% of the total segment’s revenues, bodes well. Management expects medium-term revenue growth of 7.5-8.5%. The company sees a $100 million opportunity to cross-sell Capital Market products to Banking Solutions clients.
The company focuses on top-tier strategic partnerships and future-proof underlying technologies to grow its operations. The company’s growing footprint in the crypto market is praiseworthy. It has partnered with cryptocurrency platforms like Crypto.com and OKCoin to support their respective global expansions. Further, its partnership with bitcoin-focused financial services and technology provider NYDIG is likely to increase traffic to its Digital One Mobile application. Moreover, an upgraded version of its mobile banking application bodes well. It recently launched Atelio to enable clients to embed financial services in their offerings. It expects embedded finance TAM’s revenues to be around $230 billion by 2025.
In the first quarter, Fidelity National returned $1.4 billion to shareholders in the form of share repurchases and $209 million in the form of dividends. Management aims to return at least $4 billion to its shareholders through share buybacks by the end of 2024. The company aims to maintain a 35% dividend payout ratio in 2024. It has a dividend yield of 1.9%, higher than the industry’s average of 0.8%.
The company does not move away from shedding non-core assets to boost efficiency and profitability. It completed a majority stake divestiture in Worldpay in the first quarter of 2024.
However, there are a few factors that investors should keep an eye on. The company is undertaking a multi-year modernization initiative for its platforms and applications following the successful consolidation of data centers and the modernization of its IT infrastructure. These upgrades are likely to result in increased costs in the short term. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Stocks to Consider
Some better-ranked stocks in the broader Business Services space are MoneyLion Inc. (ML - Free Report) , Global Payments Inc. (GPN - Free Report) , and Envestnet, Inc. (ENV - Free Report) . MoneyLion sports a Zacks Rank #1 (Strong Buy), while Global Payments and Envestnet carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MoneyLion’s current-year bottom line indicates a 131.3% year-over-year improvement. The consensus estimate for ML’s current-year top line is pegged at $524.8 million, suggesting 23.9% year-over-year growth.
The Zacks Consensus Estimate for Global Payments’ 2024 earnings is currently pegged at $11.63 per share, indicating 11.6% year-over-year growth. It beat estimates in each of the past four quarters with an average surprise of 1.1%. The consensus mark for GPN’s revenues of $9.2 billion suggests a 6.5% increase from the year-ago level.
The Zacks Consensus Estimate for ENV 2024 earnings of $2.62 per share suggests 23.6% year-over-year growth. It beat earnings estimates thrice in the past four quarters and met once, with an average surprise of 9.4%. The consensus estimate for ENV’s current-year revenues is pegged at $1.4 billion, a 9.6% increase from a year ago.