FIS - Embedded Expectations Analysis - 2018 04 03
Fidelity National Information Services, Inc. (FIS:USA) currently trades near recent highs relative to UAFRS-based (Uniform) Earnings, with a Uniform P/E of 23.8x, implying bullish expectations for the firm. However, management has concerns about their assets, margin guidance, and technologySpecifically, management may be downplaying concerns about the strength of their assets, and may lack confidence in the sustainability of strong growth in their digital and mobile solutions. Furthermore, they may lack confidence in their ability to meet adjusted earnings guidance of $5.10 to $5.30 per share, and may be exaggerating the expected impact of divestitures on their EBITDA margin forecast. In addition, they may be downplaying concerns about their ability to drive rapid and seamless integration across solutions to unify user interfaces and client experiences, and may lack confidence in the potential of their next-generation post rate solution, in terms of its ability to improve processing power and performance over legacy trade technology
Fidelity National Information Services is a provider of technology solutions for merchants, banks, and capital markets firms globally. The company's solutions include merchant acquiring solutions; payment solutions; global eCommerce solutions; processing and ancillary applications solutions; digital solutions; fraud, risk management and compliance solutions; electronic funds transfer and network services solutions; card and retail payment solutions; wealth and retirement solutions; item processing and output services solutions; securities processing and finance solutions; global trading solutions; asset management and insurance solutions; and corporate liquidity solutions.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
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- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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