Stock (Symbol) |
Fiserv (FISV) |
Stock Price |
$130 |
Sector |
| Financial |
Data is as of |
| December 3, 2017 |
Expected to Report |
| Feb 6 |
Company Description |
 Fiserv, 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. Source: Thomson Financial |
Sharek’s Take |
 Fiserv (FISV) provides technology banks utilize to allow 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. The rapid adoption of mobile transactions — including peer-to-peer (P2P) money transfers via cell phone — gives this company a good environment for growth. Fiserv has many different programs banks and financial institutions can utilize, including BillMatrix Next which lets people to set up payments, create digital wallets, and schedule recurring payments from their phone, tablets and laptops — from a number of payments types. This is a high quality stock that has delivered double-digit profit growth every year since 1986. That’s more than three decades of at least 10% profit growth. Management targets 4-8% sales growth and 11-18% profit growth long-term. But sales growth has slowed from 6% to 2% and 1% the past two qtrs. And the company has (1) missed profit estimates and (2) had 2017 estimates lowered from $5.12 to $5.10 and $5.08 during that time. Now profits still grew 10% and 11% the past two qtrs, but I feel this is a 14% grower and if sales growth doesn’t pick back up this stock could be a laggard in 2018 as the P/E is a lofty 23. Management doesn’t pay a dividend, but does lots of stock buybacks. An equivalent of reducing the share count 6% on an annualized basis. But with the big buybacks comes debt, and if rates continue to rise the cost of issuing new debt will rise. Overall FISV has repurchased around a third of the shares outstanding the past ten years. Fiserv software is integral to many banks, thus the stock has high certainty. Overall this stock looks to continue to grow at a low double-digit rate into the future. But I’m reducing my Fair Value on this stock from a P/E of 24 to a P/E of 22. That puts my 2018 Fair Value at $126, slightly below the recent quote of $130. Fiserv is expected deliver 6% revenue growth the next 4 qtrs. If it does so I’ll look to take my Fair Value up. |
One Year Chart |
 It’s amazing this company can deliver 11% profit growth on 1% sales growth. That’s a combination of increased profit margins and stock buybacks. FISV missed the $1.30 profit estimate by 3 cents. 2QtrsAgo it missed the $1.23 estimate by 4 cents. Qtly profit Estimates for the next 4 qtrs are 19%, 9%, 17% and 13%. I feel the company could continue to miss estimates and perhaps stay on this 10-11% profit growth trend. |
Fair Value |
 I’m taking my Fair Value P/E from 24 to 22 because this stock might go from being a 14% grower to an 11% one. That means the stock is slightly above my 2018 estimate, with 8% upside going into next year. FISV doesn’t pay a dividend. Notice how pretty the profit picture has been for Fiserv. Steady growth each year. |
Bottom Line |
 Fiserv management feels it’s well positioned to achieve its 32nd consecutive year of double-digit profit growth. And investors have been nicely rewarded throughout the years as the stock’s up five-fold this past decade. Improvements in mobile banking and acquisitions should fuel future growth, and I anticipate this company continuing to grow at a double-digit rate into the future. But sales growth needs to pick up from 1% to 5% for me to be optimistic about the stock for 2018. I’m dropping FISV from 20th to 30th in the Conservative Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 30 of 32 |
