Fidelity National Information Services Inc. (
reported first quarter 2013 earnings of 62 cents per share, up
8.5% from the year-ago quarter and beat the Zacks Consensus
Estimate by a penny.
Revenues increased 4.6% year over year to $1.48 billion slightly
ahead of the Zacks Consensus Estimate of $1.47 billion. The
year-over-year increase was primarily driven by strong
performance from its Financial Solutions segment.
Revenues from Financial Solutions increased 6.8% year over year
to $575.3 million (4.6% organically), driven by strong growth in
consulting revenues, global commercial services and eBanking
International Solutions revenues climbed 5.3% year over year to
$291.6 million. Organically, the segment grew 10.8% from the
year-ago quarter. Payment Solutions revenues increased 2.5% on a
year-over-year basis to $611.8 million. The increase was driven
by strong growth in network solutions, electronic bill payment
and output solutions.
Gross margin expanded 160 basis points ("bps") to 35.9% on the
back of favorable business mix. As far as expenses are concerned,
selling, general & administrative expense ("SG&A") as
percentage of revenues increased 30 bps from the year-ago
Operating margin expanded 130 bps from the year-ago quarter due
to modest growth in SG&A and better gross margin base. Net
income as percentage of revenues jumped to 12.3% from 11.1% in
the year-ago quarter.
Fidelity's balance sheet remained highly leveraged at the end of
the first quarter of 2013. As of Mar 31, 2013, cash and cash
equivalents were $590.6 million compared with $517.6 million in
the previous quarter. Total debt (including the current potion)
at the end of the quarter was $4.60 billion compared with $4.39
billion in the previous quarter.
Fidelity generated $207.5 million in cash from operations
versus $328.7 million in the previous quarter. Free cash flow
decreased to $147.7 million from $365.0 million in the previous
DST SYSTEMS (DST): Free Stock Analysis Report
FIDELITY NAT IN (FIS): Free Stock Analysis
FISERV INC (FISV): Free Stock Analysis Report
GLOBAL PAYMENTS (GPN): Free Stock Analysis
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For fiscal 2013, Fidelity expects revenues to grow in the range
of 4% to 6%. Organic revenue growth is expected in the range of
3% to 5%. Fidelity expects its earnings to be between $2.77 and
$2.87 per share.
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 a loyal customer base will drive growth over the
long term. Moreover, we believe that Fidelity's expansion into
emerging markets such as Brazil, India and Asia-Pacific will
drive organic revenue growth going forward.
However, increasing consolidation in the banking sector,
challenging environment for the Payments Solutions business and
uncertain regulatory environment are the primary headwinds, in
our view. Moreover, competition from
Global Payments (
DST Systems (
are the headwinds for the company.
Currently Fidelity has a Zacks Rank #3 (Hold).