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Fidelity (FIS) Q1 Earnings Beat Estimates, Revenues Rise

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·4 min read
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Fidelity National Information Services’ FIS first-quarter 2021 adjusted earnings per share from continuing operations were $1.30, surpassing the Zacks Consensus Estimate of $1.25. Also, the bottom line compared favorably with the year-ago quarter figure of $1.28.

Strong liquidity position and expanding margin were the key tailwinds. Also, decline in expenses was a positive. However, flat organic revenues posed a key concern.

On a GAAP basis, the company reported net loss attributable to common stockholders of $373 million or 60 cents per share against net earnings of $15 million or 2 cents per share in the prior-year quarter.

Organic Revenues Rise, Expenses Increase

GAAP revenues in the quarter were $3.22 billion, up 5% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $3.16 billion. Organic revenues increased 4% in the quarter, on higher growth across all three operating segments.

Selling, general and administrative expenses were $1 billion, up 14.2% from $881 million in the year-ago quarter.

Segment wise, Merchant Solutions’ GAAP revenues climbed 3% to $966 million. Revenues from Banking Solutions rose 7% to $1.54 million. Capital Market Solutions’ revenues jumped 5% to $625 million.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased to $1.31 billion from $1.25 billion in the year-ago quarter. Adjusted EBITDA margin expanded 10 basis points to 40.6%.

Balance Sheet & Cash Flow

As of Mar 31, 2021, cash and cash equivalents were $1.04 billion compared with $1.96 billion as of Dec 31, 2020. Debt outstanding was $19.4 billion.

In the first quarter, net cash provided by operations was $836 million, and the company reported free cash flow of $556 million.

The company paid out dividends worth $244 million in the reported quarter and repurchased approximately 2.8 million shares for $400 million at an average price of $143.01 per share.

Guidance

Second Quarter

Fidelity expects GAAP revenues to be between $3.37 billion and $3.39 billion. The company expects to report net earnings between 55 cents per share and 65 cents. Adjusted earnings per share are expected to be in the band of $1.52-$1.55.

Full Year

For 2021, GAAP revenues are projected to be between $13.7 billion and $13.8 billion. The company expects to report net earnings of $1.30 per share to $1.60. Adjusted earnings per share are expected to be in the band of $6.35-$6.55.

Our Viewpoint

Fidelity’s dominant position in financial and payments solutions business, backed by a robust product portfolio, keeps us encouraged. Notably, the merger of Fidelity and Worldpay will provide clients of both organizations access to a wider portfolio of digital assets for accelerating revenue growth.

However, increasing consolidation in the banking sector, a challenging environment for the Payments Solutions business and an uncertain regulatory environment are key headwinds.

Fidelity National Information Services, Inc. Price, Consensus and EPS Surprise

Fidelity National Information Services, Inc. Price, Consensus and EPS Surprise
Fidelity National Information Services, Inc. Price, Consensus and EPS Surprise

Fidelity National Information Services, Inc. price-consensus-eps-surprise-chart | Fidelity National Information Services, Inc. Quote

Fidelity currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

New York Community Bancorp, Inc. NYCB posted first-quarter 2021 earnings per share of 29 cents, inching past the Zacks Consensus Estimate of 27 cents. The figure also compares favorably with the prior-year quarter figure of 20 cents.

East West Bancorp’s EWBC first-quarter 2021 earnings per share of $1.44 outpaced the Zacks Consensus Estimate of $1.23. Also, the figure is up 44% from the prior-year quarter.

Cullen/Frost Bankers, Inc. CFR reported first-quarter 2021 earnings per share of $1.77, which handily surpassed the Zacks Consensus Estimate of $1.42. Also, it compared favorably with the prior-year quarter figure of 75 cents.

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Fidelity National Information Services, Inc. (FIS) : Free Stock Analysis Report

East West Bancorp, Inc. (EWBC) : Free Stock Analysis Report

New York Community Bancorp, Inc. (NYCB) : Free Stock Analysis Report

CullenFrost Bankers, Inc. (CFR) : Free Stock Analysis Report

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