Fiserv (FISV) is One of the Best Values in the Stock Market Today

Stock (Symbol)

Fiserv (FISV)

Stock Price


Data is as of
May 3, 2023
Expected to Report
July 24
Company Description
Fiserv is a global provider of payments and financial services technology solutions.

The Company provides account processing and digital banking solutions, card issuer processing and network services, payments, e-commerce, merchant acquiring and processing, and the Clover cloud-based point-of-sale solution.

The Company’s segments include Merchant Acceptance (Acceptance), Financial Technology (Fintech) and Payments and Network (Payments).

The Acceptance segment provides a range of commerce-enabling solutions and serves merchants of all sizes around the world. Acceptance solutions enable businesses to securely accept consumers’ electronic payment transactions online or in-person.

The Fintech segment provides financial institutions around the world with the technology solutions they need to run their operations.

The Payments segment provides financial institutions and corporate clients around the world with the products and services required to process digital payment transactions. Source: Refinitiv

Sharek’s Take
David SharekIt’s hard to find deals in this stock market nowadays. But Fiserv (FISV) is still a bargain with an Estimated Long-Term Growth Rate of 14% and a P/E of only 16. Normally a stock of this quality would have a P/E between 25 and 30. But this gem has been undervalued for years. Investors used to belie the company would have to lower profit margins due to an increase in competition in the FinTech space. Instead, Fiserv has improved its offerings and has been increasing margins. Last quarter, Adjusted Operating Margin was 33.6%, up from 32.0% a year ago. In the earnings call, management stated “This counters the narrative over the past few years that many start ups in the payments and FinTech space would disrupt and potentially replace the legacy companies.” But that didn’t happen. New innovations like CardHub allow companies to have an app for their customers.

Fiserv software controls ATM transactions, money transfers, and mobile banking to more than 13,000 banks and credit unions around the world. The company manages nearly 6 million merchant locations, 10,000 financials institutions, 140 million deposit accounts, 80 million online U.S. banking users, via nearly 1000 products and services. In July 2019 Fiserv merged with First Data (FDC). First Data specialized in point-of-sale transactions, with a substantial share of the gas and grocery market. Prior to the merger, First Data processed 4 out of 10 transactions at the point-of-sale in the US and had more than 1 billion cards on file. In April 2022, Fiserv completed its acquisition of Finxact, a developer of cloud-based digital banking solutions. Last qtr, the company completed the acquisition of Merchant One, a long-term customer, which will extend the reach of Clover to merchants-customers. Here’s some catalysts for the stock moving forward:

  • Clover is a full point-of-sale system for merchants to ring up sales, take payments on Clover point-of-sale devices, and keep track of numbers. The company also provides omnichannel shopping/checkout solutions (such as order ahead to pick up) to 10 of the top 15 quick service restaurants (QSR) including McDonald’s, Chick-fil-A, Taco Bell and Dunkin Donuts. FISV acquired BentoBox in late 2021. BentoBox builds websites for restaurants, and combined with Clover Fiserv is seeing 3x revenue per user versus a Clover-only restaurant. Clover revenue grew 22% last qtr. 
  • Carat is an ecommerce transaction platform designed for medium and large size enterprises. Perks of the platform include order-ahead and pick up in store. In grocery business, Carat serves 9 out of the top 10 grocers in the U.S. In retail, Carat serves at least 7 out of top 10 retailers. Carat grew revenue 16% last qtr. Carat even has a pay-by-plate option so gas stations can allow people to pay-at-the-pump by recognizing the vehicle’s license plate without the need for a physical credit/debit card.
  • Zelle is a digital person-to-person payments platform that allows users to send money. It’s similar to PayPal, Venmo or Cash App. Fiserv doesn’t actually own Zelle, but it does runs payment processing for it and collects interchange fees for providing this service. Zelle looks like the new leader in the send money space. Zelle is owned by Early Warning Systems, which is owned by JP Morgan Chase, Bank of America, Wells Fargo, and other big banks.

Here are some quick stats and information about business segments of FISV as of last qtr:

  • Merchant Acceptance Segment:
    • Revenue +12%, and accounted for 41% of total sales.
    • Global merchant volume growth, up 5%.
    • Clover revenue grew 22% driven by 17% payment volume growth.
    • Carat sales increased 16%.
    • Segment growth was driven by strength in payment volume growth in grocery and QSR restaurants vertical in Latin America, Asia, and North America.
  • Payments and Network Segment:
    • Revenue +11%, and accounted for 36% of total sales.
    • North American credit active accounts, up 12%.
    • Segment growth was driven by strong momentum in debit network, processing business, and digital payments.
    • The company got new client wins across processing and network business.
  • Financial Technology Segment:
    • Revenue +2%, and accounted for 17% of total sales.
    • Slower segment growth was due to timing of contracts and lapping of strong results last year.

Fiserv is a high quality stock that has delivered double-digit profit growth every year since 1986. That’s 37 years of profit growth 10% or higher! Remarkable. Since the company went public in 1986, the stock’s gone from $0.28 to $118 level. Management does not pay a dividend, but instead has purchased more than $10 billion in shares since the company’s share buyback program began in 2005. In 2022, management repurchased $2.5 billion in stock. FISV is part of the Conservative Growth Portfolio. With a P/E of only 16, the stock seems like a bargain even as its around All-Time highs. The margin story looks to continue into the upcoming quarters, so this stock could have room to run higher.

One Year Chart
This stock broke out to new highs after the company reported earnings. Still, the P/E of 16 is low. This figure was the same last qtr. I think FISV is deserving of a 22 P/E, which would be $162 a share.

The Est. LTG of 14% is outstanding for a safe stock such as this. This figure was unchanged since last qtr.

Qtrly profit growth has been good, and that’s expected to continue. This company grows profits consistently.

Earnings Table
Last qtr, Fiserv reported 13% profit growth and beat expectations of 12% growth. Revenue increased 10%, year-over-year versus estimates of 7%. Excluding the impact from unfavorable FX translations and contributions from recent acquisitions, revenue grew 13%. Adjusted operating margin improved to 33.6% from 32.0% last year due to lower operating costs.

Revenue growth was driven by solid growth in Acceptance and Payments segment. Management have observed a bit of slowdown in payments volume growth in petro sector due to decline in fuel prices. However, this is no concern to the company as their business is transaction-based model. They saw resilient consumer spending more on non-discretionary products, despite reduction in basket size.

Annual Profit Estimates increased across the board this qtr. For 2023, management raises organic revenue growth from 7% – 9% to 8% – 9% and adjusted EPS to $7.30 to $7.40. Management predicts a potential weaker economy in the second half of 2023 (but I think they are just being cautious.

Qtrly Profit Estimates are for 15%, 17%, 10%, and 14% growth the next 4 qtrs. Analysts think that FISV revenue will grow 7%, next qtr.

Fair Value
FISV currently sells for 16x 2023 profit estimates. I think that’s cheap.

My Fair Value P/E moves up from 20 to 22, or $162. So the stock still seems undervalued by 26%.

Notice the consistent profit growth each year during the past decade. This company is like a machine.

Bottom Line
Fiserv’s (FISV) ten-year chart shows a stock that used to grow steadily, but has been more recently been going sideways. Note in the table above that this stock had a P/E of 22-23 in the past. It would be nice if the P/E got back up to that level again.

This company has a lot going for it, including Clover, Carot, Zelle, and CardHub. I think FISV is in the early stages of another run higher

FISV stays at 3rd in the Conservative Portfolio Power Rankings. I will add the stock to the Growth Portfolio tomorrow where it will rank 13th in the Power Rankings.

Power Rankings
Growth Stock Portfolio

13 of 29

Aggressive Growth Portfolio


Conservative Stock Portfolio

3 of 32

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