Standing out among the Street's worst performers today is Series, a business services company whose shares slumped -14.9% to a price of $141.3, 34.39% below its average analyst target price of $215.35.
The average analyst rating for the stock is buy. FI lagged the S&P 500 index by -16.0% so far today and by -13.3% over the last year, returning 3.0%.
Fiserv, Inc. provides payments and financial services technology solutions in the United States, Europe, the Middle East and Africa, Latin America, the Asia-Pacific, and internationally. The company is a consumer cyclical company, whose sales figures depend on discretionary income levels in its consumer base. For this reason, consumer cyclical companies have better sales and stock performance during periods of economic growth, when consumers have more of an incentive to spend their money on non-essential items.
Series's trailing 12 month P/E ratio is 25.1, based on its trailing EPS of $5.64. The company has a forward P/E ratio of 11.9 according to its forward EPS of $10.19 -- which is an estimate of what its earnings will look like in the next quarter. The P/E ratio is the company's share price divided by its earnings per share. In other words, it represents how much investors are willing to spend for each dollar of the company's earnings (revenues minus the cost of goods sold, taxes, and overhead). As of the third quarter of 2024, the consumer discretionary sector has an average P/E ratio of 20.93, and the average for the S&P 500 is 29.3.
When we subtract capital expenditures from operating cash flows, we are left with the company's free cash flow, which for Series was $5.06 Billion as of its last annual report. This represents the amount of money that is available for reinvesting in the business, or for paying out to investors in the form of a dividend. With its strong cash flows, FI is in a position to do either -- which can encourage more investors to place their capital in the company. Over the last four years, the company's free cash flow has been growing at a rate of 13.7% and has on average been $3.36 Billion.
Value investors often analyze stocks through the lens of its Price to Book (P/B) Ratio (its share price divided by its book value). The book value refers to the present value of the company if the company were to sell off all of its assets and pay all of its debts today - a number whose value may differ significantly depending on the accounting method. Series's P/B ratio is 3.04 -- in other words, the market value of the company exceeds its book value by a factor of more than 3, so the company's assets may be overvalued compared to the average P/B ratio of the Consumer Discretionary sector, which stands at 2.93 as of the third quarter of 2024.
Since it has an average P/E ratio, an average P/B ratio, and generally positive cash flows with an upwards trend, Series is likely fairly valued at today's prices. The company has strong growth indicators because of an above average PEG ratio and strong operating margins with a positive growth rate. We hope you enjoyed this overview of FI's fundamentals. Be sure to check the numbers for yourself, especially focusing on their trends over the last few years.
