Fiserv Stock: Strong Cash Flow Poised for a Re-Rating?

We think Fiserv (FISV) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.

What Is Happening With FISV

FISV is down 67% so far this year and is now available at a significant discount to its 3-month, 1-year, and 2-year highs. This can be attributed to significant downward revisions in its 2025 organic revenue growth forecast and increased competitive pressures in the fintech sector. The company also faced scrutiny over past financial guidance and acknowledged internal execution issues during a recent management overhaul.

The stock may not reflect it yet, but here is what’s going well for the company: Fiserv is gaining traction with its Clover platform, expanding into new international markets, and launching innovative offerings like CashFlow Central. The merchant solutions segment continues to grow, and new leadership is driving a “One Fiserv” initiative to enhance client focus and efficiency. Free cash flow generation remains strong, supporting substantial share repurchases, and the debt-to-equity ratio is a moderate 1.20, providing financial flexibility.

FISV Has Strong Fundamentals

• Cash Yield: Fiserv offers an impressive cash flow yield of 12.7%.
• Growing: Revenue growth of 5.2% over the last twelve months means that the cash pile is going to grow.
• Valuation Discount: FISV stock is currently trading at 48% below its 3-month high, 72% below its 1-year high, and 72% below its 2-year high.

Below is a quick comparison of FISV fundamentals with S&P medians.

*LTM: Last Twelve Months

But What About The Risk Involved?

While FISV stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. FISV fell roughly 38% in the Dot-Com crash and over 51% during the Global Financial Crisis. The 2018 correction and inflation shock saw drops of about 16% and 30%, respectively. Even the Covid pandemic triggered a near 38% dip. So, despite strong fundamentals, FISV isn’t immune to sharp sell-offs when market stress hits.

If you want to see more details, read Buy or Sell FISV Stock.

Other Stocks Like FISV

Not ready to act on FISV? You could consider these alternatives:

1. Oracle (ORCL)
2. Coinbase Global (COIN)
3. Roblox (RBLX)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Positive revenue growth
3. High free cash flow yield
4. Meaningful discount to 3M, 1Y, and 2Y highs

A portfolio that was built starting 12/31/2016 with stocks that fulfil the criteria above would have performed as follows:

• Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
• Win rate (percentage of picks returning positive) of >70% for both 6-month and 12-month periods

A Multi Asset Portfolio Gives You Safer Smarter Growth

Markets move differently but a mix of assets smooths volatility. A multi asset portfolio keeps you invested and reduces the impact of sharp drops in any single area.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which 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