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 0.3% 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 a significant recalibration of 2025 organic revenue growth and increased technology investments, correcting deferred initiatives and unsustainable short-term practices.
The stock may not reflect it yet, but here is what’s going well for the company: The company’s Clover ecosystem – an all-in-one, cloud-based point-of-sale system that helps small and medium businesses – is expanding via the TD Bank Canadian merchant acquisition and new partnerships (Mastercard FIUSD, Walmart pay-by-bank). The “One Fiserv” plan drives client focus and efficiency. Moderate debt and solid cash generation, despite higher capital expenditures for future resiliency, support targeted mid-single-digit revenue growth by 2027 after 2026’s transition.
FISV Has Strong Fundamentals
- Cash Yield: Fiserv offers an impressive cash flow yield of 12.8%.
- 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 47% 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.
| FISV | S&P Median | |
|---|---|---|
| Sector | Financials | – |
| Industry | Transaction & Payment Processing Services | – |
| Free Cash Flow Yield | 12.8% | 4.0% |
| Revenue Growth LTM | 5.2% | 6.2% |
| Operating Margin LTM | 28.7% | 18.8% |
| PS Ratio | 1.7 | 3.3 |
| PE Ratio | 10.0 | 23.8 |
| Discount vs 3-Month High | -47.1% | -4.8% |
| Discount vs 1-Year High | -71.8% | -9.4% |
| Discount vs 2-Year High | -71.8% | -12.1% |
*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:
We chose these stocks using the following criteria:
- Greater than $2 billion in market cap
- Positive revenue growth
- High free cash flow yield
- Meaningful discount to 3M, 1Y, and 2Y highs
A portfolio that was built starting 12/31/2016 with stocks that fulfill 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
Portfolios Are The Smarter Way To Invest
Stocks can jump or crash, but long term success comes from staying invested. The right portfolio helps you ride gains and cushion single stock drops
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.