Fidelity National Information Services Inc.
) is scheduled to release its fiscal second quarter 2012 results
after the closing bell on July 17, 2012. Although the analysts have
revised their estimates downward in recent times, we note that
Fidelity has outperformed the Zacks Consensus Estimates by an
average of 1.68% over the last 4 quarters. We expect this trend to
continue in the current quarter.
Previous Quarter Highlights
In the first quarter, Fidelity's top line was $1.45 billion that
whisked past the Zacks Consensus Estimate of $1.44 billion, while
the bottom line of 51 cents matched the Zacks Consensus Estimate.
The top line was driven by strong organic growth coupled with
strong results from the Financial Solutions and International
Fidelity's margins expanded based on higher revenue base and
prudent business mix. The company's operational efficiencies drove
the bottom line higher on a year-over-year basis.
For further details, please read:
Fidelity's EPS In Line, Rev Beat
Estimate Revision Trend
In the last 30 days, out of the three analysts covering the
stock, two analysts revised their estimates downward and only one
upward revision was noticed. Thus, the Zacks Consensus for the
second quarter 2012 dropped by a penny in the aforementioned period
to 58 cents. For the second quarter, the revenue estimate as
per Zacks Consensus is $1.48 billion.
Analysts covering the stock are cautious on Fidelity due to the
weak macro-economic environment and sluggishness in the Payment
Solutions Group. However, the divesture of the health care business
is looked upon as a positive move that would enable the company to
focus in the core Financial Solutions Group. Moreover, an uptrend
in the organic growth also bodes well with the company's long-term
We believe that Fidelity's commanding position in the financial
services market, increasing international exposure, recurring
revenue model, diversified product portfolio, cost synergies from
acquisitions and loyal customer base will drive growth over the
long term. We also believe that Fidelity's expansion into emerging
markets such as Brazil and Europe will drive organic revenue growth
However, increasing consolidation in the banking sector, a
challenging environment for the Payments Solutions business and an
uncertain regulatory environment are the primary headwinds, in our
We maintain our Neutral recommendation on a long-term basis (for
the next 6 to 12 months), primarily due to a highly leveraged
balance sheet and intense competition from other major players such
Currently, Fidelity has a Zacks #3 Rank, which implies a
short-term Hold rating (for the next 1-3 months).
FIDELITY NAT IN (FIS): Free Stock Analysis
FISERV INC (FISV): Free Stock Analysis Report
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