Here's Why Investors Should Hold on to Fiserv (FISV) Stock
The recent acquisition of Pineapple Payments expands the reach of Fiserv's (FISV) payments solutions, especially Clover and Clover Connect.
Fiserv, Inc. FISV has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Fiserv has an expected long-term earnings per share (three to five years) growth rate of 15.2%. Its earnings are expected to increase 25.8% in 2021 and 16% in 2022.
The stock has gained 21.1% in the past year compared with 6.3% growth of the industry it belongs to.
Factors That Bode Well
Fiserv has been consistent in returning value to its shareholders. In 2020 and 2019, the company repurchased 16.1 million shares for $1.64 billion and 4.2 million shares for $394 million, respectively. In 2018 and 2017, the company had repurchased shares worth $1.91 billion and $1.17 billion, respectively. Such moves instill investors’ confidence and positively impact earnings per share.
Fiserv continues to expand its product portfolio through strategic acquisitions. The recent acquisition of Pineapple Payments has placed Fiserv in a position to expand the reach of its payments solutions, especially Clover and Clover Connect.
The company remains focused on streamlining its overall cost structure through rationalization of duplicate costs to attain planned cost synergies. It had implemented $1.1 billion of cost savings by the second quarter of 2021.
Fiserv’s total debt to total capital ratio of 0.39 was higher than the industry’s 0.37 at the end of the second quarter. A higher debt-to-capitalization ratio indicates higher risk of insolvency in challenging times.
Fiserv’s cash and cash equivalent of $841 million at the end of the quarter was well below the long-term debt level of $20.4 billion. This indicates that the company does not have enough cash to meet this debt burden. However, the cash level can meet the short-term debt of $418 million.
Zacks Rank and Stocks to Consider
Fiserv currently carries a Zacks Rank #3 (Hold).
Some better-ranked Business Services stocks are ManpowerGroup Inc. MAN, Equifax EFX and TransUnion TRU. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected earnings per share (three to five years) growth rate for ManpowerGroup, Equifax and TransUnion is pegged at 24.2%, 15.2% and 22%, respectively.
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ManpowerGroup Inc. (MAN): Free Stock Analysis Report
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