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Fidelity (FIS) Q1 Earnings Beat Estimates, Expenses Decline

Fidelity National Information Services Inc.’s FIS first-quarter 2017 adjusted earnings per share from continuing operations came in at 86 cents, surpassing the Zacks Consensus Estimate of 82 cents. Earnings improved 8.9% from the year-ago quarter figure of 79 cents.

Better-than-expected results were supported by higher revenues and lower expenses.

Net earnings were $144 million or 42 cents in the reported quarter compared with $59 million or 17 cents in the prior-year quarter.

Revenues Increase, Expenses Decline

Revenues of $2.26 billion jumped 3.4% year over year and matched the Zacks Consensus Estimate.

Organic revenue growth was 1.7% in the quarter.

Selling, general and administrative expenses came in at $413 million, down 7% year over year.

Segment wise, Integrated Financial Solutions’ revenues grew 1.4% year over year to $1.13 billion. Revenues from Global Financial Solutions were up 2.9% year over year to $1.02 billion.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) grew 7.1% year over year to $682 million while EBITDA margin was 30.2%.

Balance Sheet & Cash Flow

As of Mar 31, 2017, cash and cash equivalents were $683 million compared with $682 million as of Mar 31, 2016. Debt outstanding was nearly $10.5 billion.

In the quarter, net cash provided by operations was $705 million and free cash flow was $363 million.

Fidelity paid dividends worth $95 million in the quarter.

Guidance for 2017

Fidelity projects organic revenue growth to be in the range of 2–3% while reported revenue growth is estimated in the range of 1–2%.

Adjusted earnings per share are expected to be in the band of $4.15–$4.30 compared with $3.82 in 2016.

Adjusted EBITDA is expected in the range of $3.04–$3.12 billion.

Our Take

Fidelity enjoys a dominant position in financial and payments solutions business, backed by its robust product portfolio. We believe that the company is well positioned to benefit from increasing investment in mobile banking. However, increasing consolidation in the banking sector, challenging environment for the Payments Solutions business and an uncertain regulatory environment are the primary headwinds.

Fidelity National Information Services, Inc. Price and EPS Surprise


Fidelity National Information Services, Inc. Price and EPS Surprise | Fidelity National Information Services, Inc. Quote

Currently, Fidelity has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Stocks

Ameriprise Financial Inc.’s AMP first-quarter 2017 operating earnings per share of $2.70 comfortably surpassed the Zacks Consensus Estimate of $2.52. Also, the figure represents a year-over-year increase of 24%.

First Horizon National Corporation FHN reported first-quarter 2017 earnings per share of 23 cents, in line with the Zacks Consensus Estimate. However, the figure represents an increase of 15% from the year-ago quarter.

BlackRock, Inc. BLK reported first-quarter 2017 adjusted earnings of $5.25 per share, which handily beat the Zacks Consensus Estimate of $4.94. Moreover, the bottom line came in 24% higher than the year-ago quarter.

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