Long-established in the Software industry, Fidelity National Information Services Inc (NYSE:FIS) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 1.91%, juxtaposed with a three-month change of 9.66%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Fidelity National Information Services Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 4/10
Profitability rank: 6/10
Growth rank: 2/10
GF Value rank: 8/10
Momentum rank: 5/10
Based on the above method, GuruFocus assigned Fidelity National Information Services Inc the GF Score of 68 out of 100, which signals poor future outperformance potential.
Company Snapshot: Fidelity National Information Services Inc
Fidelity National Information Services Inc, with a market cap of $35.16 billion, is a key player in the software industry. The company, which reported sales of $14.57 billion, provides core processing and ancillary services to banks. Its business has expanded over time, with the acquisition of Sungard in 2015 and Worldpay in 2019, now offering record-keeping services to investment firms and payment processing services for merchants. The company generates about a quarter of its revenue outside North America, indicating a global presence.
Financial Strength Analysis
Fidelity National Information Services Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 3.67 positions it worse than 84.44% of 1581 companies in the Software industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Scoreis just -1.17, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.1 indicates a struggle in handling existing debt levels.
A lack of significant growth is another area where Fidelity National Information Services Inc seems to falter, as evidenced by the company's low Growth rank. Lastly, Fidelity National Information Services Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights Fidelity National Information Services Inc's potential for underperformance. While the company has a strong reputation and a history of performance, these metrics suggest that it may face challenges in maintaining this trajectory. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.