FIS - Embedded Expectations Analysis - 2020 01 02
Fidelity National Information Services (FIS:USA) currently trades above recent averages relative to UAFRS-based (Uniform) Earnings, with a Uniform P/E of 39.0x, implying bullish expectations for the firm. However, management may be concerned about their Worldpay acquisition, growth, and balance sheet.Specifically, management may be exaggerating the revenue and cost synergies they have seen from the Worldpay acquisition and the value of their technology investments in their Capital Markets segment. Furthermore, they may be concerned about their ability to leverage their scale to compete on pricing, and they may lack confidence in their ability to meet their revenue synergy goal by the end of 2022. Finally, management may be concerned about their ability to accelerate revenue growth and about the strength of their balance sheet.
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
- Stock analysts continue to make recommendations with deeply inherent biases
- 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
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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