Intrinsic value of Fidelity National Information Services - FIS

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$82.53

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$82.53

 
Intrinsic value

$202.90

 
Up/down potential

+146%

 
Rating

str. buy

 
Value-price divergence* premium content

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Our model is not good at valuating stocks of financial companies, such as FIS.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of FIS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 27.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  40.12
  30.50
  27.95
  25.66
  23.59
  21.73
  20.06
  18.55
  17.20
  15.98
  14.88
  13.89
  13.00
  12.20
  11.48
  10.83
  10.25
  9.73
  9.25
  8.83
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
Revenue, $m
  9,241
  12,060
  15,430
  19,389
  23,962
  29,170
  35,020
  41,517
  48,657
  56,431
  64,827
  73,832
  83,432
  93,612
  104,361
  115,667
  127,523
  139,925
  152,872
  166,366
  180,415
  195,029
  210,222
  226,013
  242,421
  259,473
  277,197
  295,624
  314,789
  334,729
  355,486
Variable operating expenses, $m
 
  9,613
  11,904
  14,594
  17,702
  21,241
  25,217
  29,632
  34,484
  39,767
  45,473
  50,175
  56,698
  63,617
  70,921
  78,604
  86,661
  95,089
  103,888
  113,058
  122,606
  132,537
  142,862
  153,593
  164,743
  176,332
  188,376
  200,899
  213,922
  227,473
  241,579
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  7,943
  9,613
  11,904
  14,594
  17,702
  21,241
  25,217
  29,632
  34,484
  39,767
  45,473
  50,175
  56,698
  63,617
  70,921
  78,604
  86,661
  95,089
  103,888
  113,058
  122,606
  132,537
  142,862
  153,593
  164,743
  176,332
  188,376
  200,899
  213,922
  227,473
  241,579
Operating income, $m
  1,298
  2,446
  3,526
  4,795
  6,260
  7,929
  9,804
  11,885
  14,173
  16,664
  19,354
  23,658
  26,734
  29,996
  33,440
  37,063
  40,862
  44,835
  48,984
  53,308
  57,810
  62,492
  67,361
  72,420
  77,678
  83,142
  88,821
  94,725
  100,866
  107,255
  113,906
EBITDA, $m
  2,472
  4,369
  5,591
  7,025
  8,682
  10,569
  12,689
  15,043
  17,630
  20,446
  23,489
  26,751
  30,230
  33,918
  37,813
  41,909
  46,205
  50,699
  55,390
  60,279
  65,369
  70,664
  76,169
  81,890
  87,836
  94,014
  100,436
  107,113
  114,056
  121,281
  128,802
Interest expense (income), $m
  351
  355
  526
  730
  970
  1,246
  1,561
  1,915
  2,308
  2,740
  3,210
  3,718
  4,263
  4,844
  5,460
  6,110
  6,794
  7,511
  8,262
  9,045
  9,861
  10,711
  11,595
  12,514
  13,470
  14,462
  15,494
  16,566
  17,681
  18,840
  20,047
Earnings before tax, $m
  906
  2,091
  3,000
  4,065
  5,291
  6,683
  8,242
  9,970
  11,865
  13,924
  16,144
  19,939
  22,470
  25,152
  27,980
  30,952
  34,067
  37,324
  40,722
  44,263
  47,948
  51,781
  55,765
  59,906
  64,208
  68,679
  73,327
  78,159
  83,185
  88,415
  93,860
Tax expense, $m
  317
  565
  810
  1,097
  1,429
  1,804
  2,225
  2,692
  3,203
  3,759
  4,359
  5,384
  6,067
  6,791
  7,555
  8,357
  9,198
  10,077
  10,995
  11,951
  12,946
  13,981
  15,057
  16,175
  17,336
  18,543
  19,798
  21,103
  22,460
  23,872
  25,342
Net income, $m
  568
  1,527
  2,190
  2,967
  3,862
  4,878
  6,017
  7,278
  8,661
  10,164
  11,785
  14,556
  16,403
  18,361
  20,425
  22,595
  24,869
  27,247
  29,727
  32,312
  35,002
  37,800
  40,709
  43,731
  46,872
  50,136
  53,529
  57,056
  60,725
  64,543
  68,518

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,203
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  26,031
  32,418
  41,479
  52,120
  64,415
  78,413
  94,141
  111,605
  130,798
  151,695
  174,266
  198,474
  224,280
  251,646
  280,540
  310,932
  342,804
  376,142
  410,945
  447,221
  484,987
  524,272
  565,114
  607,561
  651,670
  697,509
  745,153
  794,688
  846,206
  899,809
  955,607
Adjusted assets (=assets-cash), $m
  24,828
  32,418
  41,479
  52,120
  64,415
  78,413
  94,141
  111,605
  130,798
  151,695
  174,266
  198,474
  224,280
  251,646
  280,540
  310,932
  342,804
  376,142
  410,945
  447,221
  484,987
  524,272
  565,114
  607,561
  651,670
  697,509
  745,153
  794,688
  846,206
  899,809
  955,607
Revenue / Adjusted assets
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
Average production assets, $m
  7,126
  9,298
  11,897
  14,949
  18,475
  22,490
  27,001
  32,010
  37,514
  43,508
  49,982
  56,925
  64,326
  72,175
  80,462
  89,179
  98,320
  107,882
  117,864
  128,268
  139,100
  150,368
  162,081
  174,256
  186,907
  200,054
  213,719
  227,926
  242,702
  258,076
  274,079
Working capital, $m
  1,131
  338
  432
  543
  671
  817
  981
  1,162
  1,362
  1,580
  1,815
  2,067
  2,336
  2,621
  2,922
  3,239
  3,571
  3,918
  4,280
  4,658
  5,052
  5,461
  5,886
  6,328
  6,788
  7,265
  7,762
  8,277
  8,814
  9,372
  9,954
Total debt, $m
  10,478
  15,033
  20,859
  27,701
  35,607
  44,608
  54,720
  65,950
  78,291
  91,728
  106,241
  121,807
  138,400
  155,997
  174,575
  194,117
  214,611
  236,047
  258,426
  281,751
  306,035
  331,295
  357,556
  384,850
  413,212
  442,686
  473,321
  505,172
  538,298
  572,765
  608,643
Total liabilities, $m
  16,290
  20,845
  26,671
  33,513
  41,419
  50,420
  60,532
  71,762
  84,103
  97,540
  112,053
  127,619
  144,212
  161,809
  180,387
  199,929
  220,423
  241,859
  264,238
  287,563
  311,847
  337,107
  363,368
  390,662
  419,024
  448,498
  479,133
  510,984
  544,110
  578,577
  614,455
Total equity, $m
  9,741
  11,573
  14,808
  18,607
  22,996
  27,993
  33,608
  39,843
  46,695
  54,155
  62,213
  70,855
  80,068
  89,838
  100,153
  111,003
  122,381
  134,283
  146,707
  159,658
  173,140
  187,165
  201,746
  216,899
  232,646
  249,011
  266,020
  283,703
  302,095
  321,232
  341,152
Total liabilities and equity, $m
  26,031
  32,418
  41,479
  52,120
  64,415
  78,413
  94,140
  111,605
  130,798
  151,695
  174,266
  198,474
  224,280
  251,647
  280,540
  310,932
  342,804
  376,142
  410,945
  447,221
  484,987
  524,272
  565,114
  607,561
  651,670
  697,509
  745,153
  794,687
  846,205
  899,809
  955,607
Debt-to-equity ratio
  1.076
  1.300
  1.410
  1.490
  1.550
  1.590
  1.630
  1.660
  1.680
  1.690
  1.710
  1.720
  1.730
  1.740
  1.740
  1.750
  1.750
  1.760
  1.760
  1.760
  1.770
  1.770
  1.770
  1.770
  1.780
  1.780
  1.780
  1.780
  1.780
  1.780
  1.780
Adjusted equity ratio
  0.344
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  568
  1,527
  2,190
  2,967
  3,862
  4,878
  6,017
  7,278
  8,661
  10,164
  11,785
  14,556
  16,403
  18,361
  20,425
  22,595
  24,869
  27,247
  29,727
  32,312
  35,002
  37,800
  40,709
  43,731
  46,872
  50,136
  53,529
  57,056
  60,725
  64,543
  68,518
Depreciation, amort., depletion, $m
  1,174
  1,923
  2,064
  2,230
  2,422
  2,640
  2,885
  3,157
  3,457
  3,782
  4,134
  3,094
  3,496
  3,923
  4,373
  4,847
  5,343
  5,863
  6,406
  6,971
  7,560
  8,172
  8,809
  9,470
  10,158
  10,872
  11,615
  12,387
  13,190
  14,026
  14,896
Funds from operations, $m
  2,126
  3,450
  4,255
  5,198
  6,284
  7,518
  8,902
  10,436
  12,118
  13,947
  15,919
  17,649
  19,899
  22,283
  24,798
  27,442
  30,213
  33,110
  36,133
  39,283
  42,562
  45,972
  49,517
  53,202
  57,030
  61,008
  65,144
  69,443
  73,915
  78,569
  83,413
Change in working capital, $m
  201
  79
  94
  111
  128
  146
  164
  182
  200
  218
  235
  252
  269
  285
  301
  317
  332
  347
  363
  378
  393
  409
  425
  442
  459
  477
  496
  516
  537
  558
  581
Cash from operations, $m
  1,925
  3,143
  4,160
  5,087
  6,156
  7,373
  8,738
  10,254
  11,918
  13,729
  15,684
  17,397
  19,631
  21,998
  24,497
  27,125
  29,881
  32,762
  35,770
  38,905
  42,169
  45,563
  49,092
  52,759
  56,570
  60,531
  64,647
  68,927
  73,379
  78,011
  82,832
Maintenance CAPEX, $m
  0
  -387
  -505
  -647
  -812
  -1,004
  -1,222
  -1,467
  -1,740
  -2,039
  -2,365
  -2,716
  -3,094
  -3,496
  -3,923
  -4,373
  -4,847
  -5,343
  -5,863
  -6,406
  -6,971
  -7,560
  -8,172
  -8,809
  -9,470
  -10,158
  -10,872
  -11,615
  -12,387
  -13,190
  -14,026
New CAPEX, $m
  -616
  -2,172
  -2,599
  -3,052
  -3,526
  -4,015
  -4,511
  -5,009
  -5,505
  -5,994
  -6,474
  -6,943
  -7,401
  -7,849
  -8,287
  -8,717
  -9,141
  -9,562
  -9,982
  -10,404
  -10,832
  -11,267
  -11,714
  -12,174
  -12,651
  -13,147
  -13,665
  -14,207
  -14,776
  -15,374
  -16,004
Cash from investing activities, $m
  -619
  -2,559
  -3,104
  -3,699
  -4,338
  -5,019
  -5,733
  -6,476
  -7,245
  -8,033
  -8,839
  -9,659
  -10,495
  -11,345
  -12,210
  -13,090
  -13,988
  -14,905
  -15,845
  -16,810
  -17,803
  -18,827
  -19,886
  -20,983
  -22,121
  -23,305
  -24,537
  -25,822
  -27,163
  -28,564
  -30,030
Free cash flow, $m
  1,306
  584
  1,056
  1,388
  1,817
  2,354
  3,005
  3,777
  4,674
  5,697
  6,846
  7,738
  9,135
  10,653
  12,288
  14,035
  15,893
  17,857
  19,925
  22,095
  24,366
  26,736
  29,206
  31,776
  34,449
  37,226
  40,110
  43,105
  46,216
  49,446
  52,803
Issuance/(repayment) of debt, $m
  -1,004
  4,887
  5,826
  6,842
  7,906
  9,001
  10,113
  11,230
  12,341
  13,437
  14,513
  15,566
  16,593
  17,597
  18,578
  19,542
  20,493
  21,437
  22,378
  23,325
  24,284
  25,260
  26,261
  27,293
  28,362
  29,474
  30,635
  31,851
  33,126
  34,467
  35,878
Issuance/(repurchase) of shares, $m
  72
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -968
  4,887
  5,826
  6,842
  7,906
  9,001
  10,113
  11,230
  12,341
  13,437
  14,513
  15,566
  16,593
  17,597
  18,578
  19,542
  20,493
  21,437
  22,378
  23,325
  24,284
  25,260
  26,261
  27,293
  28,362
  29,474
  30,635
  31,851
  33,126
  34,467
  35,878
Total cash flow (excl. dividends), $m
  342
  5,470
  6,882
  8,230
  9,723
  11,354
  13,118
  15,007
  17,014
  19,134
  21,359
  23,303
  25,729
  28,250
  30,866
  33,578
  36,386
  39,294
  42,304
  45,421
  48,649
  51,996
  55,467
  59,070
  62,811
  66,700
  70,745
  74,956
  79,342
  83,913
  88,681
Retained Cash Flow (-), $m
  -420
  -2,703
  -3,235
  -3,799
  -4,389
  -4,997
  -5,615
  -6,235
  -6,852
  -7,460
  -8,058
  -8,642
  -9,213
  -9,770
  -10,315
  -10,850
  -11,378
  -11,902
  -12,425
  -12,950
  -13,483
  -14,025
  -14,581
  -15,153
  -15,747
  -16,364
  -17,009
  -17,684
  -18,392
  -19,136
  -19,920
Prev. year cash balance distribution, $m
 
  871
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,638
  3,647
  4,431
  5,334
  6,357
  7,503
  8,772
  10,163
  11,673
  13,301
  14,661
  16,516
  18,480
  20,551
  22,728
  25,008
  27,392
  29,879
  32,470
  35,167
  37,971
  40,887
  43,916
  47,064
  50,336
  53,736
  57,272
  60,950
  64,777
  68,761
Discount rate, %
 
  7.80
  8.19
  8.60
  9.03
  9.48
  9.95
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.11
PV of cash for distribution, $m
 
  3,375
  3,116
  3,460
  3,774
  4,042
  4,246
  4,374
  4,418
  4,374
  4,244
  3,933
  3,675
  3,362
  3,010
  2,636
  2,259
  1,891
  1,547
  1,236
  963
  731
  540
  389
  272
  184
  121
  77
  48
  28
  16
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Fidelity National Information Services, Inc., a financial services technology company, offers a range of solutions in retail and institutional banking, payments, asset and wealth management, and risk and compliance in the United States. The company operates through Integrated Financial Solutions and Global Financial Solutions segments. It also provides financial consulting and outsourcing services. The Integrated Financial Solutions segment offers various solutions, including core processing and ancillary applications; digital solutions, such as Internet, mobile, and e-banking; fraud, risk management, and compliance solutions; electronic funds transfer and network services; card and retail solutions; corporate liquidity; wealth management; item processing and output services; government payments solutions; and e-payment solutions. The Global Financial Solutions segment provides banking and payments solutions, and consulting and transformation services to financial institutions worldwide, which include securities processing and finance, global trading, asset management and insurance, retail banking and payments services, strategic consulting services, public sector and education, global commercial services, and retail check processing. The company offers consulting and technology services under the Capco brand. Fidelity National Information Services, Inc. was founded in 1968 and is headquartered in Jacksonville, Florida.

FINANCIAL RATIOS  of  Fidelity National Information Services (FIS)

Valuation Ratios
P/E Ratio 47.7
Price to Sales 2.9
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 14.1
Price to Free Cash Flow 20.7
Growth Rates
Sales Growth Rate 40.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 48.4%
Cap. Spend. - 3 Yr. Gr. Rate 12.9%
Financial Strength
Quick Ratio 4
Current Ratio 0.3
LT Debt to Equity 104.2%
Total Debt to Equity 107.6%
Interest Coverage 4
Management Effectiveness
Return On Assets 3%
Ret/ On Assets - 3 Yr. Avg. 4.1%
Return On Total Capital 2.8%
Ret/ On T. Cap. - 3 Yr. Avg. 4.2%
Return On Equity 6%
Return On Equity - 3 Yr. Avg. 8.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 32.6%
Gross Margin - 3 Yr. Avg. 32.8%
EBITDA Margin 26.3%
EBITDA Margin - 3 Yr. Avg. 27.7%
Operating Margin 14%
Oper. Margin - 3 Yr. Avg. 16.8%
Pre-Tax Margin 9.8%
Pre-Tax Margin - 3 Yr. Avg. 14%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. 8.8%
Effective Tax Rate 35%
Eff/ Tax Rate - 3 Yr. Avg. 34.5%
Payout Ratio 60%

FIS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FIS stock intrinsic value calculation we used $9241 million for the last fiscal year's total revenue generated by Fidelity National Information Services. The default revenue input number comes from 2016 income statement of Fidelity National Information Services. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our FIS stock valuation model: a) initial revenue growth rate of 30.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.8%, whose default value for FIS is calculated based on our internal credit rating of Fidelity National Information Services, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Fidelity National Information Services.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of FIS stock the variable cost ratio is equal to 83.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for FIS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Fidelity National Information Services.

Corporate tax rate of 27% is the nominal tax rate for Fidelity National Information Services. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the FIS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for FIS are equal to 77.1%.

Life of production assets of 18.4 years is the average useful life of capital assets used in Fidelity National Information Services operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for FIS is equal to 2.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $9741 million for Fidelity National Information Services - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 327.054 million for Fidelity National Information Services is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Fidelity National Information Services at the current share price and the inputted number of shares is $27.0 billion.


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COMPANY NEWS

▶ FIS to Report First Quarter Financial Results on May 2   [Apr-04-17 08:30AM  Business Wire]
▶ Online brokerage battle heats up   [Feb-28-17 01:32PM  CNBC Videos]
▶ Could FIS Be a Great Value Buy in 2017?   [Feb-13-17 07:36AM  Market Realist]
▶ FIS Increases Quarterly Dividend 12% to $0.29 per Share   [Jan-25-17 05:12PM  Business Wire]
▶ 4 Stocks Expected to Hike Dividends Next Week   [Jan-20-17 05:38PM  at Barrons.com]
▶ 10 Great All-Weather Stocks   [08:01AM  at Kiplinger]
▶ [$$] PayPal Taps Citigroup For New Mobile Push   [12:28AM  at The Wall Street Journal]
▶ [$$] PayPal Taps Citigroup For New Mobile Push   [12:22PM  at The Wall Street Journal]
▶ Here Is What Hedge Funds Think About Fiserv Inc. (FISV)   [Dec-14-16 02:38PM  at Insider Monkey]
▶ Servus Credit Union Expands Payment Capabilities with FIS   [Dec-13-16 08:00AM  Business Wire]
▶ FIS Expands Its Real-time P2P Payment Solutions Offering   [Nov-29-16 04:42PM  Business Wire]
▶ Hedge Funds Are Betting On Hershey Co (HSY)   [04:27AM  at Insider Monkey]
▶ Is VMware, Inc. (VMW) A Good Stock To Buy?   [03:09AM  at Insider Monkey]
Stock chart of FIS Financial statements of FIS
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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