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What to Expect from Fidelity National's (FIS) Q1 Earnings

Zacks Equity Research

Fidelity National Information Services, Inc. FIS is set to release first-quarter 2017 earnings results on May 2, before the opening bell.

In the last quarter, the company reported adjusted earnings per share of $1.14, in line with the Zacks Consensus Estimate. The results were driven by higher revenues, partially offset by increase in expenses.

Notably, Fidelity delivered positive earnings surprises in three of the prior four quarters, with an average positive surprise of 3.4%.

Fidelity National Information Services, Inc. Price and EPS Surprise

Fidelity National Information Services, Inc. Price and EPS Surprise | Fidelity National Information Services, Inc. Quote

In the past six months, Fidelity’s shares gained 13.1%, outperforming the Zacks categorized Financial Transaction Services industry’s 10.6% growth.

Factors to Consider

Over the years, Fidelity strengthened its dominant position in the financial and payments solutions business, primarily based on its superior product portfolio.

The company’s service revenues are likely to increase because of higher U.S. debit as well as credit card payment volumes.

During the quarter, Fidelity completed the sale of its SunGard Public Sector and Education businesses to Vista Equity Partners for $850 million. The sale of the units is in line with its strategy to focus more on its core operations of providing software, technology and processing services to the retail and institutional banking, payments, and asset and wealth management sectors. The company intends to utilize the cash proceeds (net of taxes and deal-related expenses) of $500 million for reducing its outstanding debt.

The company’s focus on introducing new and innovative products in order to meet the growing demands of customers is likely to increase expenses, as witnessed in the past.

Earnings Whispers

According to our quantitative model, it is less likely that Fidelity will be able to beat earnings this time. This is because the company does not have the right combination of the two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better – for increasing its chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: The Earnings ESP for Fidelity is 0.00%. This is because the Most Accurate Estimate matches the Zacks Consensus Estimate of 82 cents.

Zacks Rank: Fidelity has a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some stocks that, per our model, have the right combination of elements to post an earnings beat this season:

Moody’s Corporation MCO is scheduled to release first-quarter 2017 results on May 5. Its Earnings ESP is +7.38% and it carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ares Management L.P. ARES has an Earnings ESP of +2.56% and a Zacks Rank #3. It is slated to report first-quarter results on May 8.

The Earnings ESP for Manning & Napier, Inc. MN is +14.29% and it carries a Zacks Rank #3. The company is scheduled to release first-quarter results on May 3.

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Moody's Corporation (MCO): Free Stock Analysis Report
Ares Management L.P. (ARES): Free Stock Analysis Report
Manning & Napier, Inc. (MN): Free Stock Analysis Report
Fidelity National Information Services, Inc. (FIS): Free Stock Analysis Report
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