Stock Spotlight

Fiserv serves up consistency

 

Fiserv ($213; FI) is leveraged to the spending trends of both consumers and banks seeking to upgrade their technology. While that exposure to consumers could raise some investor concerns, especially amid plunging consumer sentiment, Fiserv’s consistency is impressive.

The company seems capable of growing in virtually any kind of market. Per-share profits have risen every year since 2000, with double-digit gains in 24 of those 25 years. Annual revenue has dipped just once in the past 15 years. Annual operating cash flow has climbed in 11 of the past 12 years.

Fiserv’s Quadrix® Overall rank is a modest 74, dragged down by its Value score of just 27. But the stock looks timely, given its steady operating growth, rising profit estimates, and solid share-price action. Fiserv is a Focus List Buy.

Business breakdown

Fiserv supplies technology to financial institutions for processing deposits, managing loans, and offering digital-banking services. It also helps clients securely accept payment transactions. Primary customers are merchants, banks, and credit unions.

In 2024, Fiserv grew per-share profits 17%, revenue 6%, operating cash flow 28%, and free cash flow 30% to $5.23 billion. Both gross and operating profit margin rose to record highs. For the December quarter, Fiserv posted 15% per-share-profit growth, supported by 6% higher sales.

A stream of new software and hardware products supports Fiserv’s growth, as does its addition of larger enterprise clients and merchants. Fiserv may face some risks if cryptocurrencies become more common tender for banking and bill payments. But, for now, customers seem likely to keep spending on technology that plays to Fiserv’s strengths, such as mobile-payment processing.

In February, Fiserv approved the repurchase of 60 million shares, nearly 11% of the total outstanding. Management bought back 5% of its shares last year and 14% over the past five years.

Fiserv expects 2025 per-share profits to rise 15% to 17% on organic revenue growth of 10% to 12%. Fiserv also anticipates further expansion of its operating profit margin this year. Management conceded that year-over-year comparisons for the March quarter would prove challenging, resulting in a somewhat back-loaded forecast. Although management’s profit target straddled the then-consensus estimate, analysts have revised their full-year 2025 estimates higher since Fiserv’s earnings report.

Conclusion

Fiserv shares have dipped 3% in the past month but remain up 8% in 2025, running well ahead of the 1% average return for stocks in the S&P 500 Index financial-services industry. The stock’s trailing P/E ratio of 25 exceeds the financial-services industry norm of 12 but remains well below its own three-year norm of 33.

Fiserv Inc., 600 N. Vel R. Phillips Ave., Milwaukee, WI 53203, (262) 879-5000, www.fiserv.com.

 

 

 

 

Quadrix Scores

 

* Earnings exclude special items.
NA Not Available.
Quadrix® scores are percentile ranks, with 100 the best.
e Dividend and yield estimated.