Fiserv FISV has performed well so far this year and has the potential to sustain the momentum in the near term as well. Consequently, if you have not taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes It an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourse on a year-to-date basis. Shares of Fiserv have returned 45.6% on a year-to-date basis, outperforming the 40.5% rally of the industry it belongs to and 13.4% rise of the Zacks S&P 500 composite.
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Solid Zacks Rank: Fiserv currently carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 offer attractive investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. The Zacks Consensus Estimate for third-quarter 2019 earnings has increased 10.7% over the past 60 days. Earnings estimates for 2019 and 2020 have moved up 4.8% and 2.4%, respectively, over the same time period.
Positive Earnings Surprise History: Fiserv has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in two of the preceding four quarters, with the average earnings surprise being 0.6%.
Strong Growth Prospects: The Zacks Consensus Estimate for third-quarter 2019 earnings is pegged at 93 cents, indicating growth of 24% from the year-ago quarter reported figure. Moreover, earnings in 2019 and 2020 are expected to register 18.7% and 25.1% growth, respectively, from the year-ago reported figures. The company has a long-term expected EPS (three to five years) growth rate of 12%.
Growth Factors: Fiserv continues to expand its product portfolio and enhance its offerings with the help of strategic acquisitions. On Jul 29, Fiserv completed the acquisition of First Data in one of the biggest financial mergers in a decade. It will help Fiserv emerge as one of the world’s largest payments and financial technology providers.
In 2018, Fiserv completed the purchase of Elan’s debit card processing, ATM Managed Services and MoneyPass surcharge free network for approximately $690 million. It should boost Fiserv’s payments portfolio, widen its client base and provide new solutions to enhance the value proposition for its existing 3,000 debit solutions clients. In 2017, Fiserv completed four acquisitions – Online Banking Solutions, Inc., PCLender, LLC, Dovetail Group Limited and Monitise plc. These buyouts helped the company to improve cash management and digital business banking solutions and transform payments infrastructure.
Fiserv’s diversified product portfolio continues to yield a steady flow of customers. The rapidly changing financial services industry and increasing demand for digital banking and payment services provide significant growth opportunities to Fiserv. Notably, second-quarter 2019 witnessed significant client additions. Fiserv's DNA platform signed six new clients and completed seven new client implementations in the reported quarter. Debit transaction grew in high single digits and total P2P transactions, including Popmoney and Zelle solutions, grew almost 100%. Zelle transactions almost quadrupled from the prior-year quarter and the number of live clients more than doubled sequentially. Mobiliti ASP subscribers increased 16% to nearly 9 million. Backed by such strong demand, the company expects to witness more client additions moving ahead.
Other Stocks to Consider
Some other top-ranked stocks in the broader Zacks Business Services sector are Visa V, Huron Consulting HURN and Accenture ACN, each carrying a Zacks Rank #2. Long-term expected EPS (three to five years) growth rate for Visa, Huron Consulting and Accenture is 16.5%, 13.5% and 10.3%, respectively.
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