Comparative Study: Fiserv And Industry Competitors In Financial Services Industry

In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Fiserv FI in relation to its major competitors in the Financial Services industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate company's performance in the industry.

Fiserv Background

Fiserv is a leading provider of core processing and complementary services, such as electronic funds transfer, payment processing, and loan processing, for us banks and credit unions, with a focus on small and midsize banks. Through the merger with First Data in 2019, Fiserv also provides payment processing services for merchants. About 10% of the company's revenue is generated internationally.

When conducting a detailed analysis of Fiserv, the following trends become clear:

• The Price to Earnings ratio of 27.77 is 0.77x lower than the industry average, indicating potential undervaluation for the stock.

• Considering a Price to Book ratio of 3.01, which is well below the industry average by 0.39x, the stock may be undervalued based on its book value compared to its peers.

• The stock's relatively high Price to Sales ratio of 4.62, surpassing the industry average by 1.06x, may indicate an aspect of overvaluation in terms of sales performance.

• The Return on Equity (ROE) of 2.51% is 5.19% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.

• The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.96 Billion, which is 1.98x above the industry average, implying stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $2.88 Billion, which indicates 2.09x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 7.39% is significantly below the industry average of 13.62%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

When assessing Fiserv against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:

• Fiserv has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.85.

• This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.

Key Takeaways

For Fiserv, the PE and PB ratios suggest the stock is undervalued compared to peers, indicating potential for growth. However, the high PS ratio may indicate overvaluation based on revenue. In terms of profitability, Fiserv's low ROE suggests lower returns compared to industry peers, while high EBITDA and gross profit indicate strong operational performance. The low revenue growth rate may pose a challenge for Fiserv in capturing market share compared to competitors in the Financial Services industry.

This article was generated by Benzinga's automated content engine and reviewed by an editor.