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Here's Why Investors Should Retain Fiserv (FISV) Stock Now

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·3 min read
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Fiserv, Inc. FISV has an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of quality and sustainability of its growth.

The company has an expected long-term earnings per share (three to five years) growth rate of 15.4%. The stock has gained 15.6% in the past six months compared with 12.2% rise of the industry it belongs to.

Factors Behind the Rally

Fiserv continues to focus on improving product and service quality through leveraging its size and scale of operations, reducing costs as well as effectively integrating First Data operations. The company is streamlining its overall cost structure through rationalization of duplicate costs to attain planned cost synergies.

Fiserv continues to expand its product portfolio through strategic acquisitions. In 2020, the company completed the acquisitions of MerchantPro Express, Bypass Mobile and Inlet. On Dec 16, 2020, the company signed a definitive agreement to acquire Ondot Systems. This acquisition is expected to help Fiserv expand digital capabilities and enable clients of all sizes to deliver friction-less, digital-first and personalized experiences to their consumers. In 2019, the company acquired First Data, which is one of the biggest financial mergers in a decade. It is helping Fiserv emerge as one of the world’s largest payments and financial technology providers.

Risks Associated

Fiserv’s total debt to total capital ratio of 0.40 was higher than the industry’s 0.39 at the end of third-quarter 2020. A higher debt to capitalization ratio indicates higher risk of insolvency in challenging times.

Further, the company’s cash and cash equivalent of $937 million at the end of the quarter was well below the long-term debt level of $20.9 billion. This indicates that the company doesn’t have enough cash to meet this debt burden. However, the cash level can meet the short-term debt of $365 million.

Zacks Rank and Key Picks

Fiserv currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are ManpowerGroup Inc. MAN, The Interpublic Group of Companies, Inc. IPG and BG Staffing, Inc. BGSF. ManpowerGroup and The Interpublic Group carry a Zacks Rank #2 (Buy), while BG Staffing sports a Zacks Rank #1 (Strong 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, The Interpublic Group and BG Staffing is pegged at 3.5%, 1.3% and 20%, respectively.

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Fiserv, Inc. (FISV) : Free Stock Analysis Report
ManpowerGroup Inc. (MAN) : Free Stock Analysis Report
Interpublic Group of Companies, Inc. The (IPG) : Free Stock Analysis Report
BG Staffing Inc (BGSF) : Free Stock Analysis Report
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