Long-established in the Software industry, Fidelity National Information Services Inc (FIS, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 0.09%, juxtaposed with a three-month change of 19.6%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Fidelity National Information Services Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 6/10
- Growth rank: 1/10
- GF Value rank: 10/10
- Momentum rank: 7/10
Based on the above method, GuruFocus assigned Fidelity National Information Services Inc a GF Score of 69 out of 100, which signals poor future outperformance potential.
Understanding Fidelity National Information Services Inc's Business
Fidelity National Information Services Inc, with a market cap of $37.5 billion and sales of $17.08 billion, operates at an operating margin of 11.76%. The company's legacy operations provide core processing and ancillary services to banks, but its business has expanded over time. By acquiring Sungard in 2015, Fidelity National Information Services Inc now provides record-keeping and other services to investment firms. With the acquisition of Worldpay in 2019, FIS now provides payment processing services for merchants and holds leading positions in the United States and United Kingdom. About a fourth of revenue is generated outside North America, indicating a significant international presence.
Financial Strength Breakdown
Fidelity National Information Services Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 3.45, which positions it worse than 84.08% of 1570 companies in the Software industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just -1.09, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.03 indicates a struggle in handling existing debt levels.
Growth Prospects
A lack of significant growth is another area where Fidelity National Information Services Inc seems to falter, as evidenced by the company's low Growth rank. The company's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency. This is a stark contrast to the company's historical performance and raises questions about its ability to sustain growth in the future.
Next Steps
Considering Fidelity National Information Services Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should be cautious and consider these factors when evaluating the company's future prospects. For those seeking more robust investment opportunities, GuruFocus Premium members can find companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
