FI Pulls Back to Support. Smart Time to Enter?
Fiserv (FI) should be on your watchlist. Here is why – it is currently trading in the support zone ($133.00 – $147.00), levels from which it has bounced meaningfully before. The stock saw buying interest on 12/8/2023 resulting in peak return of 79.7% in the next 451 days.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 12/8/2023 | 79.7% | 451 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For FI Read Buy or Sell FI Stock to see how convincing this buy opportunity might be.
Here are some quick data points:
- Revenue Growth: 6.7% LTM and 7.5% last 3 year average.
- Cash Generation: Nearly 24.4% free cash flow margin and 30.0% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for FI was 6.7%.
- Valuation: FI trades at a PE multiple of 22.8
- Opportunity vs S&P: Compared to S&P, you get lower valuation, higher revenue growth, and better margins
Fiserv provides payment and financial technology services, including point-of-sale merchant acquiring, digital commerce, general ledger management, and debit, credit, and prepaid card processing.
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| FI | S&P Median | |
|---|---|---|
| Sector | Financials | – |
| Industry | Transaction & Payment Processing Services | – |
| PE Ratio | 22.8 | 23.7 |
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|
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| LTM* Revenue Growth | 6.7% | 5.1% |
| 3Y Average Annual Revenue Growth | 7.5% | 5.2% |
| Min Annual Revenue Growth Last 3Y | 6.7% | -0.3% |
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| LTM* Operating Margin | 30.0% | 18.7% |
| 3Y Average Operating Margin | 26.7% | 17.8% |
| LTM* Free Cash Flow Margin | 24.4% | 13.0% |
*LTM: Last Twelve Months
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
What Is Stock-Specific Risk If The Market Crashes?
That said, this stock isn’t immune to sharp drops. It fell about 38% in the Dot-Com bubble and over 51% during the Global Financial Crisis. The 2018 correction only clipped it by around 16%, but the Covid sell-off still took it down near 38%. Even the recent inflation shock pushed it down roughly 30%. Solid fundamentals matter, but when the market turns, downside can be steep regardless.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read FI Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.