Fidelity National (FIS) Q4 Earnings Beat, Expenses Decline

Fidelity National Information Services ' FIS fourth-quarter 2018 adjusted earnings per share from continuing operations came in at $1.60, surpassing the Zacks Consensus Estimate of $1.58. Also, the bottom line improved 29% from the year-ago quarter figure of $1.24.

Lower expenses and expanding margin were the key tailwinds. Slight growth in GAAP revenues was another positive factor. However, huge outstanding debt posed a key concern.

On a GAAP basis, the company reported ne t earnings attributable to common stockholders of $299 million or 91 cents in the quarter compared with $934 million or $2.77 in the prior-year quarter. In fourth-quarter 2017, the company reported a large favorable adjustment due to the tax reform.

For full-year 2018, adjusted net earnings attributable to common stockholders came in at $1.7 billion or $5.23 per share compared with $1.4 billion or $4.27 per share in the prior year. The Zacks Consensus Estimate was pegged at $5.22.

Revenues Increase, Expenses Decline

GAAP revenues for the quarter came in at $2.17 billion, which increased marginally year over year. However, the figure lagged the consensus estimate of $2.21 billion.

For 2018, the company reported GAAP revenues of $8.42 billion, down 2.8% year over year. Also, the top line lagged the consensus estimate of $8.47 billion.

Organic revenue growth was nearly 3% in the quarter.

Selling, general and administrative expenses came in at $321 million, down 4.7% year over year.

Segment wise, Integrated Financial Solutions' GAAP revenues grew 2.5% to $1.13 billion while revenues from Global Financial Solutions declined 1% to $976 million. Corporate/Other revenues decreased 20.7% to $65 million.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) rose nearly 5.4% year over year to $864 million while adjusted EBITDA margin expanded 200 basis points (bps) to 39.9%.

Balance Sheet & Cash Flow

As of Dec 31, 2018, cash and cash equivalents were $703 million compared with $665 million as of Dec 31, 2017. Debt outstanding was nearly $9 billion.

In the fourth quarter, net cash provided by operations was $705 million and free cash flow was $551 million.

Fidelity paid dividends worth $105 million in the quarter and repurchased 1.4 million shares at a total cost of about $150 million. As of Dec 31, 2018, the company had about $2.68 billion share repurchase authorization remaining.

Guidance for 2019

Fidelity expects organic revenue growth to be between 3.5% and 4.5% while GAAP revenues are expected to remain flat.

Adjusted earnings per share are expected to be in the band of $7.35-$7.55.

Adjusted EBITDA margin is expected to expand in the range of 150-200 bps.

Our Take

Fidelity enjoys a dominant position in financial and payments solutions business, backed by a robust product portfolio. We believe that the company is well positioned to benefit from increasing investment in digitization.

However, increasing consolidation in the banking sector, challenging environment for the Payments Solutions business and an uncertain regulatory environment are the primary headwinds.

Fidelity National Information Services, Inc. Price, Consensus and EPS Surprise

Fidelity National Information Services, Inc. Price, Consensus and EPS Surprise | Fidelity National Information Services, Inc. Quote

Fidelity currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Performance of Other Stocks

Alliance Data Systems Corporation's ADS operating earnings of $7.04 per share in the fourth quarter of 2018 beat the Zacks Consensus Estimate of $7.01. The bottom line improved 12% year over year on strength in Card Services.

The Western Union Company WU reported fourth-quarter 2018 operating earnings of 49 cents per share, in line with the Zacks Consensus Estimate and up 19.5% year over year.

Total System Services, Inc.'s TSS fourth-quarter 2018 earnings per share of $1.08 surpassed the Zacks Consensus Estimate by 1.9% and surged nearly 31.5% year over year. Strong performance by all three segments contributed to this favorable result.

Zacks' Best Stock-Picking Strategy

It's hard to believe, even for us at Zacks. But from 2000-2018, while the market gained +4.8% per year, our top stock-picking strategy averaged +54.3% per year.

How has that screen done lately? From 2017-2018, it sextupled the market's +15.8% gain with a soaring +98.3% return.

Free - See the Stocks It Turned Up for Today >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Fidelity National Information Services, Inc. (FIS): Get Free Report

Alliance Data Systems Corporation (ADS): Get Free Report

Total System Services, Inc. (TSS): Free Stock Analysis Report

The Western Union Company (WU): Get Free Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics

Earnings Stocks

Latest Markets Videos


    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

    Learn More