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With Fiserv You’re Paying For Quality

Stock (Symbol)

Fiserv (FISV)

Stock Price

$109

Sector
Financial
Data is as of
July 7, 2016
Expected to Report
Aug 2
Company Description
fiserv_orange_logoFiserv, Inc. (Fiserv) is a global provider of financial services technology. The Company provides account processing systems; electronic payments processing products and services, and related services, including document and payment card production and distribution, check processing and imaging, source capture systems, and lending and risk management products and services. The Company’s Payments and Industry Products segment primarily provides debit, credit and prepaid card processing and services, electronic bill payment and presentment services, Internet and mobile banking software and services, person-to-person payment services, and other electronic payments software and services. The Company’s Financial Institution Services business segment provides account processing services, item processing and source capture services, loan origination and servicing products, cash management and consulting services. Source: Thomson Financial
Sharek’s Take
David SharekWhen you own Fiserv (FISV) stock, you’re paying for quality. The company provides technology that allows withdrawing money from an ATM, money transfers and mobile banking to more than 13,000 banks and credit unions around the world. It integrates banks with billers including AT&T, Discover, T-Mobile, Chase, American Express and utilities to make paying bills online easy. This is a top-notch stock, and has delivered double-digit profit growth every year since 1986. Management targets 11-18% profit growth going forward. Revenues grow only around 5% a year, but the company buys back stock to boost EPS. Management repurchased $320 million in stock last qtr, which was between 1% and 2% of shares. Fiserv is a safe conservative stock with an outstanding track record. The only issue is now the stock is priced high. From 2006 through 2014 FISV had a median P/E between 11 and 20. Now the P/E has jumped to 25. My Fair Value is a P/E of 22, thus I am holding out and looking to buy for conservative accounts if the stock falls below $100.
One Year Chart
FISV_2016_Q2Outstanding that management delivered 19% profit growth last qtr on just 4% revenue growth. Analysts had predicted 15% growth. Estimates for the next 4 qtrs are 13%, 12%, 14% and 8% profit growth, with the last qtr likely to increase as it gets closer. Last year when the stock was in the high-$80s it sold for 23x earnings. Now the P/E is 25.
Fair Value
FISV_2016_Q2_PHWow, we should have bought FISV back in 2008-2012 when the P/E was between 11 and 14. What a bargain. But at the time I was unaware of the consistency with the company’s profit growth. Now it seems too many people are aware of this, and have priced the stock up to record highs.
Bottom Line
FISV_2016_Q2_10yrFiserv has grown profits at least 10% per year since 1986. This stock has stability and safety and would be a great addition to conservative growth accounts. The only issue is we just went through a period where safe stocks got overvalued and more aggressive growth stocks became undervalued. Thus FISV is a little high to buy right now. I have the stock on my radar and will look to purchase for the Conservative Portfolio below $100.
Power Rankings
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