Fidelity (FIS) Q3 Earnings Beat Estimates, Revenues Decline


Fidelity National Information Services Inc.’s FIS third-quarter 2017 adjusted earnings per share from continuing operations came in at $1.18, surpbading the Zacks Consensus Estimate of $1.06. Earnings improved 18% from the year-ago quarter figure of $1.00.

Fidelity’s results reflect lower expenses and a strong liquidity position. Further, the company raised its 2017 earnings per share guidance. However, decline in revenues remains a headwind.

Net earnings were $61 million or 18 cents in the reported quarter compared with $185 million or 56 cents in the prior-year quarter.

Revenues and Expenses Decline

Revenues of $2.20 billion declined 4.8% year over year and lagged the Zacks Consensus Estimate of $2.23 billion.

Organic revenue growth was 0.8% in the quarter.

Selling, general and administrative expenses came in at $327 million, down 14.8% year over year.

Segment wise, Integrated Financial Solutions’ revenues grew 0.5% year over year to $1.12 billion while revenues from Global Financial Solutions declined 6.7% to $997 million.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell nearly 1% year over year to $760 million while adjusted EBITDA margin expanded 180 basis points to 34.5%.

Balance Sheet & Cash Flow

As of Sep 30, 2017, cash and cash equivalents were $720 million compared with $701 million as of Sep 30, 2016. Debt outstanding was nearly $9.1 billion.

In the quarter, net cash provided by operations was $534 million and free cash flow was $402 million.

Fidelity paid dividends worth $97 million in the quarter.

Guidance for 2017

Fidelity expects organic revenue growth to be in the range of 2-3% while reported revenue growth is expected to remain stable or decline 1%.

Adjusted earnings per share are expected to be in the band of $4.38-$4.43 compared with $4.22-$4.32 previously provided by the company.

Adjusted EBITDA is expected in the range of $3.04-$3.07 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.

Currently, Fidelity has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fidelity National Information Services, Inc. Price and EPS Surprise

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

Performance of Other Stocks

SVB Financial Group SIVB reported third-quarter 2017 earnings per share of $2.79, outpacing the Zacks Consensus Estimate of $2.29. Further, the bottom line jumped 31.6% from the year-ago quarter.

Cullen/Frost Bankers, Inc. CFR reported a positive surprise of 7.6% in third-quarter 2017. Earnings per share of $1.41 handily surpbaded the Zacks Consensus Estimate of $1.31. Moreover, the reported figure was 13.7% higher than $1.24 recorded in the year-ago quarter.

Federated Investors, Inc. FII delivered a positive earnings surprise of around 6% for third-quarter 2017, marking the tenth straight quarter of earnings beat. Earnings per share of 56 cents beat the Zacks Consensus Estimate of 53 cents and improved 4% year over year.

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