Fiserv, Inc. (FISV) is set to report first quarter 2014 results on Apr 29. Last quarter, it posted a 2.47% negative surprise. However, we note that Fiserv has an average positive surprise of 1.90% over the past four quarters.
Let’s see how things are shaping up for this announcement.
Growth Factors This Past Quarter
Fiserv has expanded its foothold in the financial and payment solutions business supported by its broad customer base and various contract wins from the likes of Bank of America (BAC), TD Bank (TD), American Electric Power (AEP) and Humana (HUM).
Moreover, Fiserv’s diversified product portfolio and continued technology upgrades are expected to boost its top-line growth. Additionally, higher recurring revenues, operational efficiencies and strong internal growth are expected to result in solid earnings and free cash flow growth.
However, the back-end loaded guidance is expected to remain a concern in 2014. We also believe intensifying competition from the likes of Global Payments (GPN) and MasterCard Inc (MA) remains a major headwind, going forward.
Earnings Whispers?
Our proven model does not conclusively show that Fiserv is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: The Most Accurate estimate stands at 74 cents, which coincides with the Zacks Consensus Estimate. Hence, the difference is of 0.00%.
Zacks Rank #3 (Hold): Fiserv’s Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
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