Can Fiserv (FISV) Run Higher on Rising Earnings Estimates?
Fiserv (FISV) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
Analysts' growing optimism on the earnings prospects of this financial services technology company is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Fiserv, as there has been strong agreement among the covering analysts in raising estimates.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The earnings estimate of $0.93 per share for the current quarter represents a change of +24% from the number reported a year ago.
Over the last 30 days, five estimates have moved higher for Fiserv while four have gone lower. As a result, the Zacks Consensus Estimate has increased 9.92%.
Current-Year Estimate Revisions
For the full year, the earnings estimate of $3.76 per share represents a change of +21.29% from the year-ago number.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, six estimates have moved up for Fiserv versus two negative revisions. This has pushed the consensus estimate 9.24% higher.
Favorable Zacks Rank
Thanks to promising estimate revisions, Fiserv currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom Line
Investors have been betting on Fiserv because of its solid estimate revisions, as evident from the stock's 7.3% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.
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Fiserv, Inc. (FISV) : Free Stock Analysis Report
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