FISV - Embedded Expectations Analysis - 2020 12 02
Fiserv, Inc. (FISV:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 22.0x Uniform P/E. At these levels, markets are pricing in bearish expectations for the firm, and management may have concerns about their e-commerce sales, Zelle growth, and Architect businessSpecifically, management may lack confidence in their ability to sustain their deal wins, maintain sales momentum in e-commerce solutions, and create shareholder value. In addition, they may have concerns about their ability to meet their revenue synergy estimates, and they might be concerned about continued weaknesses in license and termination fees. Furthermore, they may be overstating their ability to maintain their pretax earnings, the potential of their Architect business, and the capabilities of their other Mobiliti assets. Finally, they may be concerned about the sustainability of Zelle growth
Fiserv is a provider of financial services technology. The company provides account processing systems, electronic payments processing products and services, internet and mobile banking systems, and related services. The company's segments are: First Data, which provides merchant acquiring, e-commerce, mobile commerce, and other business solutions; Payments and Industry Products, which provides electronic bill payment and presentment services, internet and mobile banking software; and Financial Institution Services, which provides financial institutions with account processing services, item processing and source capture services, loan origination and servicing products, and cash management, among others.
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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