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Fidelity National Information Services, Inc. FIS is well-poised to grow on the back of its Future Forward initiative, cross-selling efforts, vertical expansion and margin expansion. Thegrowing global e-commerce market holds tremendous opportunity for the company.
Fidelity National — with a market cap of $42.5 billion — provides banking and payments technology solutions, processing services and information-based services to the financial services industry. Courtesy of solid prospects, this stock is worth investing in at the moment.
Zacks Rank & Price Performance
FIS currently carries a Zacks Rank #2 (Buy). In the past three months, the stock has gained 19%, against the industry’s decline of 0.8%.
Image Source: Zacks Investment Research
2024 Estimates & Surprise History
The Zacks Consensus Estimate for FIS’ 2024 earnings per share is pegged at $4.93, indicating a 46.3% increase from the year-ago estimated figure. Revenues are expected to be around $10.1 billion in 2024.
The company beat earnings in two of the last four quarters and missed twice.
Growth Drivers
Fidelity National is benefiting from strong recurring revenue growth across all its segments. Strong execution and more accounts should continue to fuel top-line growth in the Banking Segment. The company expects banking-adjusted revenues to grow between 3% and 3.5% in 2024. Moreover, the recent banking uncertainty is boding well for FIS, leading to growth in accounts on file serviced on its platforms and hence rising banking revenues. Growth in existing clients, the contribution of high-growth products and tuck-in acquisitions are expected to fuel revenue growth in the mid-term of around 3.5-4.5%.
The company continues to benefit from increasing Capital Market revenues in the first quarter of 2024. It expects revenues in this segment to grow in the range of 6.5-7% in 2024. The company’s continued investments in emerging platforms like artificial intelligence and blockchain technology should continue to add value to its services. Expanding into the non-core sub-segment, which accounts for 30% of the total segment’s revenues, bodes well. Management expects medium-term revenue growth of 7.5-8.5%. Cross-selling of banking products to capital markets clients highlights a $300 million revenue opportunity, posing the segment well for growth.
The company focuses on top-tier strategic partnerships and future-proof underlying technologies to grow its operations. The company’s growing footprint in the crypto market is praiseworthy. It has partnered with cryptocurrency platforms like Crypto.com and OKCoin to support their respective global expansions. Further, its partnership with bitcoin-focused financial services and technology provider NYDIG is likely to increase traffic to its Digital One Mobile application. It recently unveiled Atelio to enable clients to embed financial services in their offerings. It expects embedded finance TAM’s revenues to be around $230 billion by 2025.