FIS - Fidelity National Has Gone Back To Its Core To Drive Consistent High-Margin Growth
2024-06-27 13:09:32 ET
Summary
- FIS has renewed its focus on its core legacy Banking and Capital Markets operations, selling a controlling stake in Worldpay to a private equity buyer.
- Both Banking Solutions and Capital Markets generate high-margin recurring revenues from sticky customer relationships, and FIS holds strong share among outsourced services to larger banks.
- With banks looking to leverage growth opportunities in payments, capital markets, and asset management, FIS can grow its Banking Solutions business further, as many banks can't afford a go-it-alone strategy.
- Private lending could be an underappreciated opportunity for FIS to provide some of the same systems and services to new clients.
- Long-term revenue growth of around 4% and strong EBITDA and FCF margins can support a fair value in the mid-$80's.
Fidelity National Information Services ( FIS ) has gone back to its past, having sold a controlling stake in the Worldpay merchant services business to a private equity buyer, FIS is once again focused on its long-time core businesses of providing outsourced processing, payment, and tech solutions to banking and investment clients. It’s a business that has performed well for FIS in the past and where it still holds strong share. Better still, it’s a business where competitive pressures are pushing financial institutions towards even more investment in digital capabilities....
Fidelity National Has Gone Back To Its Core To Drive Consistent, High-Margin Growth