Report
Valens Research

Valens Equity Weekly Insights - 2024 05 21

Fidelity National Information Services (FIS) bit off more than it could chew with its WorldPay acquisition. Management has since recognized that and has taken steps to get back to its core business while focusing on growing and improving efficiency. Uniform Accounting highlights that the market is missing that FIS is already starting to execute, indicating equity upside.

FIS is one of the giants in the payment processing industry. It specializes in working with the banks, and its WorldPay acquisition helped it get more exposure to merchants. Now that it's spinning off WorldPay, management has started focusing on growing in the banking side of the payments industry, and it's taking steps to make its existing business more efficient. This should help it keep its Uniform ROA consistently above 50% as it has been for years, and yet, the market is pricing its growth and returns to fade to their lowest levels in years.

FIS management is closely aligned to focus on metrics that will incentivize revenue growth, and improved efficiency which should drive profitability and growth higher than the market expects.

Management's confidence about its strong new sales momentum point to sustained fundamental momentum going forward.
Underlying
Fidelity National Information Services Inc.

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.

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Valens Research
Valens Research

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:

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