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Fidelity National Information Services: Fallen Into Value Territory

Sean C McCluskey profile picture
Sean C McCluskey


  • Fidelity National Information Services announced results for 4Q 2021 and its full year 2021 in February 2022. Management announced a 20% dividend increase in line with their capital allocation policy.
  • The forward yield is an above-market 1.9%. The 3-year dividend growth rate is 7.8%, and the 5-year dividend growth rate is 8.9%.
  • Fidelity National Information Services offers solid free cash flow and excellent dividend growth. Going forward, analysts' are projecting double-digit earnings growth in 2022 (11.1%) and 2023 (13.0%).
  • The current valuation is attractive with a forward PE of 13.4 and a free cash flow yield of over 5.9%.

Tree Growth In nature And beautiful morning

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Investment Thesis

The Fintech space has seen a huge amount of weakness in the past year, after the COVID-19 bounce arguably took shares to overvalued territory. This has been an industry wide market correction with shares of

This article was written by

Sean C McCluskey profile picture
I am a qualified Chartered Accountant based in the UK with a passion for long term value investing. I work in Audit and have many years of Finance experience. I believe in investing at reasonable prices to ensure you can participate fully in the growth of the underlying business.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of FIS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (15)

Based on the updated outlook today, both 2022 revenues and EPS will be higher than last year, and yet the stock has dropped by 53% from the high. Makes no sense.

Now selling at just over 8 PE, even on lowered earnings.
I can’t believe I missed this. FIS is a great company with a bit of a moat. This is overdone, I’m cost averaging in starting tomorrow. Wish Ingot it at $90 but oh well you can’t win them all.
Nice article. This is a stock I am just starting to research. I like it that its not just down but down a third from it pre covid highs. Too many stocks are down but they have yet to unwind all the fed excess yet. I think we have farther to fall in this market but I will continue my reading and keep my eye on it. Like the fact they reiterated guidance.
Sean C McCluskey profile picture
@Robert 7809591 Thank you! Yes I agree, it doesn't feel like the market is done going down by any stretch. I still see lots of overpriced stocks especially in the growth space. This isn't a full position for me yet, so I'm also keeping my eye on it.
@Sean C McCluskey I notice you include paypal and square in your article. If this company provides services to other large financial instittutions should they be included. I am also looking at other fintech names like sofi and paysafe.
Why did it fall form ATH?
Sean C McCluskey profile picture
@J2.0 Most likely a combination of over-valuation, increased competition, slowing growth and wider market/global risks.
@Sean C McCluskey Ok thanks. And any clues of why the cost of revenue is pretty high? Its pressuring the earnings a lot.
Sean C McCluskey profile picture
@J2.0 They don't really breakdown cost of revenue in their financial statements, I'd guess staff costs but you might want to email investor relations if you want more info.
sandimas profile picture
Good one to keep an eye on. See if it can stay above 50 day moving average this time. Fintech has been getting killed for so long, it's probably already bottomed.
7422981 profile picture
@sandimas This one is(was @ recent low) reasonable priced against what likely is an overpriced SP500 at this particular point in time. I think it could eventually trade up and possibly fill the mid FEB gap on the chart if the market doesn't slide in the next couple of weeks. Relative performance against the SP500 is turning and should return the multiple back to the benchmark.
Sean C McCluskey profile picture
@sandimas thanks for reading and the comment!
7422981 profile picture
You're a bit late. Value territory was $15 ago.... Although it should trade to the Feb 14 gap.
Sean C McCluskey profile picture
@7422981 ideally would have got this article out closer to the time of my purchase at $90, still think there’s good value from a fundamental perspective here however. Thanks for reading and the comments!
7422981 profile picture
@Sean C McCluskey Well, I would definitely own this vs the market at this stage, but once it returns to a level more expensive than a market multiple, I think it is time to exit. Convergence doesn't necessary mean it is without risk after the recent market rally.

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