Fidelity National Information Services, Inc. FIS benefits from recurring revenue growth, international market presence, strategic acquisitions and collaborations, and strong cash flows supporting investments.

FIS’ Zacks Rank & Price Rally

Fidelity National currently carries a Zacks Rank #3 (Hold).

The stock has gained 27.4% in the past year compared with the industry’s 22.6% growth. The Zacks Business Services sector increased 21.1% and the S&P 500 composite index rose 24.7% in the same time frame.

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Fidelity National’s Robust Growth Prospects

The Zacks Consensus Estimate for FIS’ 2025 earnings is pegged at $5.72 per share, indicating an improvement of 10.4% from the 2024 estimate. The consensus estimate for revenues is pegged at $10.6 billion, indicating an increase of 4.2% from the 2024 estimate.

FIS’ Decent Earnings Surprise History

The bottom line of Fidelity National outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 8.16%.

Fidelity National’s Business Tailwinds

Fidelity National continues to achieve robust top-line growth, driven by the strong performance of its Banking Solutions and Capital Market Solutions segments. The Banking unit benefits from new client acquisitions while the Capital Markets business sees consistent sales growth, bolstering its recurring revenue stream. Revenues from Banking Solutions and Capital Market Solutions improved 2% and 7%, respectively, on a year-over-year basis in the first nine months of 2024.

Apart from a strong U.S. presence, FIS has a notable international presence in markets such as the United Kingdom, Germany, Australia, Brazil, and Canada. The company makes use of organic growth initiatives and strategic acquisitions, which contribute to securing multi-year recurring contracts.

Fidelity National drives growth through its organic strategies by creating innovative solutions and executing focused sales and marketing initiatives. These efforts aim to acquire new clients and strengthen its foothold in target markets.

FIS leverages acquisitions to expand its product portfolio, broaden its customer base and increase its geographic footprint while enabling entry into new markets. Additionally, it partners with other organizations to provide comprehensive solutions to their clients.

The increasing digitization across various industries creates a perfect environment for FIS to capitalize on through its comprehensive suite of technology solutions. The company invests in cutting-edge technologies, process enhancements and infrastructure upgrades to improve operational efficiency and deliver value to clients. These efforts reinforce its competitive edge in the evolving digital landscape.

FIS’ robust cash flow generation abilities empower it to pursue strategic business investments. This financial strength also supports consistent shareholder returns through share buybacks and dividend payouts. Net cash provided by operating activities advanced 7.1% year over year in the first nine months of 2024. Its dividend yield of 1.8% remains higher than the industry average of 0.7%.

FIS’ Key Risks

Fidelity National faces significant headwinds, including economic uncertainty that could impact consumer spending and transaction revenues, high-cost pressures and substantial investments in e-commerce that may strain financials and hinder short-term growth. FIS anticipates ongoing consolidation within the banking and financial services sector to adversely impact revenue growth by reducing its customer base. This is particularly concerning because the company provides multiple services to both merging entities. Compounding these challenges is Fidelity National’s high debt burden, with $10.5 billion in long-term debt as of Sept. 30, 2024.

Stocks to Consider

Some better-ranked stocks in the Business Services space are SPS Commerce, Inc. SPSC, Verisk Analytics, Inc. VRSK and ICF International, Inc. ICFI. While SPS Commerce currently sports a Zacks Rank #1 (Strong Buy), Verisk Analytics and ICF International carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SPS Commerce’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.65%. The Zacks Consensus Estimate for SPSC’s 2025 earnings implies an improvement of 14.6% from the 2024 estimate. The consensus mark for revenues indicates a 17.9% rise from the 2024 estimate. The consensus mark for SPSC’s 2025 earnings has moved 0.3% north in the past 30 days.

The bottom line of Verisk Analytics beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 4.24%. The Zacks Consensus Estimate for VRKS’s 2025 earnings implies an improvement of 9.4% from the 2024 estimate. The consensus mark for revenues implies a rise of 7.2% from the 2024 estimate. The consensus mark for VRSK’s 2025 earnings has moved 0.1% north in the past 60 days.

ICF International’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 13.56%. The Zacks Consensus Estimate for ICFI’s 2025 earnings indicates an improvement of 9.3% from the 2024 estimate. The consensus mark for revenues indicates an 7.6% rise from the 2024 estimate. The consensus mark for ICFI’s 2025 earnings has moved 0.7% north in the past 60 days.

Shares of SPS Commerce and Verisk Analytics have gained 1.3% and 14.4%, respectively, in the past year. However, ICF stock has lost 3.4% in the same time frame.

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Fidelity National Information Services, Inc. (FIS) : Free Stock Analysis Report

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