Fiserv, Inc.FISV is gaining from a diverse product portfolio that continues to yield a steady flow of customers.
Shares of the company have improved 11.5% in the past year outperforming the 10.3% rise of the industry it belongs to.
With expected long-term earnings per share growth rate of 11.5% and a market cap of $29.1 billion, it is a stock that investors should retain in their portfolios for now.
Factors Driving Fiserv's Performance
A strong position in the financial and payments solutions on the back of a diverse product portfolio, broad customer base, high recurring revenues and consistent technology upgrades are boosting Fiserv's momentum.
The recent acquisition of debit processing solutions of Elan Financial Services is expected to boost the company's payments portfolio, expand client base and provide new solutions to enhance the value proposition for the existing 3,000 debit solutions clients.
Fiserv, Inc. Revenue (TTM)
Fiserv focuses on returning value to shareholders through share repurchases. In the first nine months of 2018, Fiserv repurchased 16.6 million shares for $1.23 billion. It repurchased shares worth $1.17 billion, $1.20 billion and $1.47 billion in 2017, 2016 and 2015, respectively. Shareholder-friendly initiatives instill investors' optimism and make a positive impact on earnings.
Despite riding on significant growth prospects, Fiserv is not free from overhangs. The company has a debt-heavy balance sheet, with debt at the end of the third quarter accounting for 64% of total capital. A high debt may limit the company's future expansion and worsen its risk profile. Also, Fiserv's policy of acquiring a large number of companies results in integration risk. Nevertheless, we believe that strong market position and increasing customer base bode well for Fiserv.
Stocks to Consider
Fiserv carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the Zacks Business Services sector are Insperity NSP , SPS Commerce SPSC and Information Services Group III , each sporting a Zacks Rank #1 (Strong Buy).You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected EPS (three to five years) growth rate for Insperity, SPS Commerce and Information Services Group is 18%, 20%, and 14%, respectively.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.