Betting on Profits? Fidelity National's Q3 Earnings Could be Key

Fidelity National Information Services, Inc. FIS is set to report third-quarter 2024 results on Nov. 4, 2024, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $1.29 per share on revenues of $2.57 billion.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.The third-quarter earnings estimate has remained stable over the past 60 days. The bottom-line projection indicates a year-over-year increase of 37.2%. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 3.1%. Image Source: Zacks Investment ResearchFor the current year, the Zacks Consensus Estimate for Fidelity National’s revenues is pegged at $10.15 billion, implying a decline of 17.1% year over year. However, the consensus mark for current year EPS is pegged at $5.09, implying a jump of around 51% on a year-over-year basis.Fidelity Nationalbeat the consensus estimate for earnings in two of the last four quarters and missed on the other occasions, with the average surprise being negative 4.2%.Fidelity National Information Services, Inc. Price and EPS Surprise Fidelity National Information Services, Inc. price-eps-surprise | Fidelity National Information Services, Inc. QuoteQ3 Earnings Whispers for FISOur proven model predicts a likely earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That’s precisely the case here.Fidelity Nationalhas an Earnings ESP of +0.05% and a Zacks Rank #2.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.You can see the complete list of today’s Zacks #1 Rank stocks here.What’s Shaping FIS’ Q3 Results?Fidelity National's third-quarter performance is poised to capitalize on the global digital transformation trend and growing transactions. Its strategic investments in mobile banking and expanded product offerings align with evolving consumer preferences, enhancing financial results.The Zacks Consensus Estimate for revenues from the Banking Solutions segment indicates 3.1% year-over-year growth, whereas our model estimate suggests a 2.8% increase. The Zacks Consensus Estimate for the segment’s adjusted EBITDA signals a 2.5% increase from the year-ago quarter’s reported figure.Its long-established relationships with financial and commercial institutions help it to generate recurring revenues. Strong recurring revenue growth in both the segments and new sales momentum are likely to have aided its third-quarter results. The Zacks Consensus Estimate and our model estimate for revenues from the Capital Market Solutions segment suggest nearly 8% year-over-year growth.The consensus mark for Capital Market Solutions’ adjusted EBITDA signals a 7.2% increase from the year-ago figure, whereas we expect it to grow 6.5%. The company’s investments in technology and innovation across high-growth markets are anticipated to have helped expand its total addressable market in the quarter under review. These factors are likely to have positioned the company for not only year-over-year growth but also an earnings beat.However, expenses are likely to have risen due to the investments. The company is expected to have witnessed increased costs related to improvement works in platforms and applications and some inflationary pressures. Our estimate for the cost of revenues is pegged at $1.54 billion. We expect SG&A expenses to grow 11.5% year over year in the quarter. These are likely to have partially offset the positives.Also, the divestment of Worldpay Merchant Solutions business is likely to have affected some figures in the quarter under review. Nonetheless, considering its geographical presence, the consensus mark for North America third-quarter revenues is pegged at $1.98 billion, while the same for Other regions is pegged at $581.4 million.FIS’ Price Performance & ValuationFidelity National's stock has rallied 51% year to date, outperforming the industry’s growth of 14.4% and the S&P 500 Index’s 22.5% gain. Among its peers, Mastercard Incorporated MA has increased 20.4%, while The Western Union Company WU has lost 9.4% during the same period.FIS’ YTD Price Performance Image Source: Zacks Investment ResearchNow, let’s look at the value Fidelity National offers investors at current levels.Despite the company’s share price outperforming the industry, its valuation appears cheaper when measured against industry averages. Currently, FIS is trading at 16.34X forward 12-month earnings, below the industry’s average of 23.47X. Image Source: Zacks Investment ResearchWhat Should Investors Do?Fidelity National focuses on investing in growth initiatives that support its robust revenue trajectory. The company’s broad customer base, high recurring revenues, and strong digital strategy reinforce its market position and core business resilience. Investments in technology and innovation, particularly in mobile banking solutions like mobile wallets, expand its addressable market as mobile use rises. Strategic cryptocurrency initiatives add further growth potential, meeting the demand for diverse payment options.With its shareholder value-enhancing activities, attractive valuation, and potential for another earnings beat, current shareholders might consider holding. Prospective investors could see a buying opportunity and watch upcoming earnings for further insights.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mastercard Incorporated (MA): Free Stock Analysis Report Fidelity National Information Services, Inc. (FIS): Free Stock Analysis Report The Western Union Company (WU): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks