Intrinsic value of Fiserv, Inc. - FISV

Previous Close

$86.90

  Intrinsic Value

$22.23

stock screener

  Rating & Target

str. sell

-74%

Previous close

$86.90

 
Intrinsic value

$22.23

 
Up/down potential

-74%

 
Rating

str. sell

We calculate the intrinsic value of FISV 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 0001), $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 34.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
  4.87
Revenue, $m
  5,957
  6,110
  6,282
  6,472
  6,681
  6,909
  7,155
  7,421
  7,705
  8,010
  8,335
  8,681
  9,049
  9,439
  9,853
  10,291
  10,754
  11,243
  11,760
  12,305
  12,880
  13,486
  14,124
  14,797
  15,505
  16,250
  17,034
  17,859
  18,727
  19,639
Variable operating expenses, $m
  4,354
  4,464
  4,589
  4,727
  4,878
  5,043
  5,221
  5,413
  5,620
  5,840
  6,036
  6,287
  6,553
  6,836
  7,135
  7,452
  7,788
  8,142
  8,516
  8,911
  9,327
  9,766
  10,228
  10,715
  11,228
  11,767
  12,335
  12,933
  13,561
  14,222
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
  4,354
  4,464
  4,589
  4,727
  4,878
  5,043
  5,221
  5,413
  5,620
  5,840
  6,036
  6,287
  6,553
  6,836
  7,135
  7,452
  7,788
  8,142
  8,516
  8,911
  9,327
  9,766
  10,228
  10,715
  11,228
  11,767
  12,335
  12,933
  13,561
  14,222
Operating income, $m
  1,603
  1,646
  1,693
  1,745
  1,803
  1,866
  1,934
  2,007
  2,086
  2,170
  2,299
  2,395
  2,496
  2,604
  2,718
  2,839
  2,966
  3,101
  3,244
  3,394
  3,553
  3,720
  3,896
  4,081
  4,277
  4,482
  4,699
  4,926
  5,165
  5,417
EBITDA, $m
  1,941
  1,991
  2,047
  2,109
  2,177
  2,251
  2,331
  2,418
  2,511
  2,610
  2,716
  2,829
  2,948
  3,076
  3,210
  3,353
  3,504
  3,663
  3,832
  4,009
  4,197
  4,394
  4,602
  4,821
  5,052
  5,295
  5,550
  5,819
  6,102
  6,399
Interest expense (income), $m
  147
  322
  333
  345
  360
  376
  393
  412
  432
  454
  478
  503
  530
  559
  590
  622
  657
  693
  732
  772
  815
  861
  908
  959
  1,012
  1,068
  1,127
  1,188
  1,254
  1,322
  1,394
Earnings before tax, $m
  1,282
  1,313
  1,348
  1,386
  1,428
  1,473
  1,522
  1,575
  1,631
  1,692
  1,796
  1,864
  1,937
  2,014
  2,096
  2,182
  2,273
  2,370
  2,472
  2,579
  2,692
  2,812
  2,937
  3,070
  3,209
  3,356
  3,510
  3,672
  3,843
  4,023
Tax expense, $m
  346
  354
  364
  374
  385
  398
  411
  425
  440
  457
  485
  503
  523
  544
  566
  589
  614
  640
  667
  696
  727
  759
  793
  829
  866
  906
  948
  992
  1,038
  1,086
Net income, $m
  936
  958
  984
  1,012
  1,042
  1,075
  1,111
  1,150
  1,191
  1,235
  1,311
  1,361
  1,414
  1,470
  1,530
  1,593
  1,659
  1,730
  1,804
  1,883
  1,965
  2,052
  2,144
  2,241
  2,343
  2,450
  2,562
  2,681
  2,806
  2,937

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  11,522
  11,818
  12,151
  12,519
  12,923
  13,363
  13,840
  14,353
  14,904
  15,493
  16,122
  16,791
  17,503
  18,258
  19,058
  19,905
  20,801
  21,747
  22,746
  23,801
  24,913
  26,085
  27,320
  28,620
  29,989
  31,431
  32,948
  34,543
  36,222
  37,987
Adjusted assets (=assets-cash), $m
  11,522
  11,818
  12,151
  12,519
  12,923
  13,363
  13,840
  14,353
  14,904
  15,493
  16,122
  16,791
  17,503
  18,258
  19,058
  19,905
  20,801
  21,747
  22,746
  23,801
  24,913
  26,085
  27,320
  28,620
  29,989
  31,431
  32,948
  34,543
  36,222
  37,987
Revenue / Adjusted assets
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
Average production assets, $m
  4,319
  4,430
  4,554
  4,692
  4,844
  5,009
  5,187
  5,380
  5,586
  5,807
  6,043
  6,294
  6,561
  6,844
  7,143
  7,461
  7,797
  8,151
  8,526
  8,921
  9,338
  9,777
  10,240
  10,728
  11,241
  11,781
  12,350
  12,948
  13,577
  14,238
Working capital, $m
  -203
  -208
  -214
  -220
  -227
  -235
  -243
  -252
  -262
  -272
  -283
  -295
  -308
  -321
  -335
  -350
  -366
  -382
  -400
  -418
  -438
  -459
  -480
  -503
  -527
  -552
  -579
  -607
  -637
  -668
Total debt, $m
  6,162
  6,397
  6,662
  6,955
  7,277
  7,627
  8,006
  8,415
  8,853
  9,323
  9,823
  10,356
  10,922
  11,523
  12,160
  12,834
  13,547
  14,301
  15,096
  15,935
  16,820
  17,753
  18,736
  19,772
  20,862
  22,009
  23,216
  24,486
  25,822
  27,227
Total liabilities, $m
  9,172
  9,407
  9,672
  9,965
  10,287
  10,637
  11,016
  11,425
  11,863
  12,333
  12,833
  13,366
  13,932
  14,533
  15,170
  15,844
  16,557
  17,311
  18,106
  18,945
  19,830
  20,763
  21,746
  22,782
  23,872
  25,019
  26,226
  27,496
  28,832
  30,237
Total equity, $m
  2,351
  2,411
  2,479
  2,554
  2,636
  2,726
  2,823
  2,928
  3,040
  3,161
  3,289
  3,425
  3,571
  3,725
  3,888
  4,061
  4,243
  4,436
  4,640
  4,855
  5,082
  5,321
  5,573
  5,839
  6,118
  6,412
  6,721
  7,047
  7,389
  7,749
Total liabilities and equity, $m
  11,523
  11,818
  12,151
  12,519
  12,923
  13,363
  13,839
  14,353
  14,903
  15,494
  16,122
  16,791
  17,503
  18,258
  19,058
  19,905
  20,800
  21,747
  22,746
  23,800
  24,912
  26,084
  27,319
  28,621
  29,990
  31,431
  32,947
  34,543
  36,221
  37,986
Debt-to-equity ratio
  2.620
  2.650
  2.690
  2.720
  2.760
  2.800
  2.840
  2.870
  2.910
  2.950
  2.990
  3.020
  3.060
  3.090
  3.130
  3.160
  3.190
  3.220
  3.250
  3.280
  3.310
  3.340
  3.360
  3.390
  3.410
  3.430
  3.450
  3.470
  3.490
  3.510
Adjusted equity ratio
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  936
  958
  984
  1,012
  1,042
  1,075
  1,111
  1,150
  1,191
  1,235
  1,311
  1,361
  1,414
  1,470
  1,530
  1,593
  1,659
  1,730
  1,804
  1,883
  1,965
  2,052
  2,144
  2,241
  2,343
  2,450
  2,562
  2,681
  2,806
  2,937
Depreciation, amort., depletion, $m
  338
  345
  354
  363
  374
  385
  398
  411
  425
  440
  417
  434
  452
  472
  493
  515
  538
  562
  588
  615
  644
  674
  706
  740
  775
  812
  852
  893
  936
  982
Funds from operations, $m
  1,273
  1,304
  1,338
  1,375
  1,416
  1,460
  1,509
  1,560
  1,616
  1,675
  1,728
  1,795
  1,866
  1,942
  2,022
  2,107
  2,197
  2,292
  2,392
  2,498
  2,609
  2,727
  2,850
  2,981
  3,118
  3,262
  3,414
  3,574
  3,742
  3,919
Change in working capital, $m
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
Cash from operations, $m
  1,278
  1,309
  1,343
  1,381
  1,423
  1,468
  1,517
  1,569
  1,626
  1,685
  1,739
  1,807
  1,879
  1,955
  2,036
  2,122
  2,213
  2,309
  2,410
  2,516
  2,629
  2,747
  2,872
  3,004
  3,142
  3,287
  3,441
  3,602
  3,771
  3,950
Maintenance CAPEX, $m
  -291
  -298
  -306
  -314
  -324
  -334
  -345
  -358
  -371
  -385
  -400
  -417
  -434
  -452
  -472
  -493
  -515
  -538
  -562
  -588
  -615
  -644
  -674
  -706
  -740
  -775
  -812
  -852
  -893
  -936
New CAPEX, $m
  -96
  -111
  -125
  -138
  -151
  -165
  -179
  -192
  -206
  -221
  -236
  -251
  -267
  -283
  -300
  -317
  -336
  -355
  -375
  -395
  -417
  -439
  -463
  -487
  -513
  -540
  -569
  -598
  -629
  -662
Cash from investing activities, $m
  -387
  -409
  -431
  -452
  -475
  -499
  -524
  -550
  -577
  -606
  -636
  -668
  -701
  -735
  -772
  -810
  -851
  -893
  -937
  -983
  -1,032
  -1,083
  -1,137
  -1,193
  -1,253
  -1,315
  -1,381
  -1,450
  -1,522
  -1,598
Free cash flow, $m
  891
  900
  913
  929
  948
  969
  993
  1,019
  1,048
  1,079
  1,102
  1,139
  1,178
  1,220
  1,265
  1,312
  1,363
  1,416
  1,473
  1,533
  1,597
  1,664
  1,735
  1,810
  1,889
  1,972
  2,060
  2,152
  2,249
  2,352
Issuance/(repayment) of debt, $m
  203
  236
  265
  293
  322
  350
  379
  409
  438
  469
  501
  533
  566
  601
  637
  674
  713
  753
  795
  839
  885
  933
  983
  1,035
  1,090
  1,147
  1,207
  1,270
  1,336
  1,405
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  203
  236
  265
  293
  322
  350
  379
  409
  438
  469
  501
  533
  566
  601
  637
  674
  713
  753
  795
  839
  885
  933
  983
  1,035
  1,090
  1,147
  1,207
  1,270
  1,336
  1,405
Total cash flow (excl. dividends), $m
  1,094
  1,136
  1,178
  1,223
  1,270
  1,320
  1,372
  1,428
  1,486
  1,548
  1,603
  1,672
  1,744
  1,821
  1,901
  1,986
  2,076
  2,170
  2,268
  2,372
  2,482
  2,597
  2,718
  2,845
  2,979
  3,119
  3,267
  3,422
  3,585
  3,757
Retained Cash Flow (-), $m
  -58
  -60
  -68
  -75
  -82
  -90
  -97
  -105
  -112
  -120
  -128
  -137
  -145
  -154
  -163
  -173
  -183
  -193
  -204
  -215
  -227
  -239
  -252
  -265
  -279
  -294
  -309
  -326
  -342
  -360
Prev. year cash balance distribution, $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 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
  1,036
  1,075
  1,110
  1,147
  1,187
  1,230
  1,275
  1,323
  1,374
  1,428
  1,475
  1,535
  1,599
  1,667
  1,738
  1,814
  1,893
  1,977
  2,065
  2,157
  2,255
  2,358
  2,466
  2,580
  2,699
  2,825
  2,958
  3,097
  3,243
  3,397
Discount rate, %
  8.50
  8.93
  9.37
  9.84
  10.33
  10.85
  11.39
  11.96
  12.56
  13.19
  13.85
  14.54
  15.26
  16.03
  16.83
  17.67
  18.55
  19.48
  20.46
  21.48
  22.55
  23.68
  24.86
  26.11
  27.41
  28.78
  30.22
  31.73
  33.32
  34.99
PV of cash for distribution, $m
  955
  906
  849
  788
  726
  663
  599
  536
  474
  414
  354
  301
  252
  208
  169
  134
  105
  80
  60
  44
  32
  22
  15
  10
  6
  4
  2
  1
  1
  0
Current shareholders' claim on cash, %
  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

Fiserv, Inc. is a provider of financial services technology. The Company provides account processing systems; electronic payments processing products and services, such as electronic bill payments, transaction processing, account-to-account transfers, and person-to-person payments; Internet and mobile banking systems, and related services, including document and payment card production and distribution, and lending and risk management products and services. The Company operates through two segments: Payments and Industry Products and the Financial Institution Services. The Payments segment services include electronic bill payment and presentment services, Internet and mobile banking software and services, and other electronic payments software and services. The Financial segment provides account processing services, item processing and source capture services, loan origination and servicing products, cash management and consulting services, and other products and services.

FINANCIAL RATIOS  of  Fiserv, Inc. (FISV)

Valuation Ratios
P/E Ratio 20.1
Price to Sales 3.4
Price to Book 7.4
Price to Tangible Book
Price to Cash Flow 13.1
Price to Free Cash Flow 16.4
Growth Rates
Sales Growth Rate 4.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -19.2%
Cap. Spend. - 3 Yr. Gr. Rate 4.2%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 175.8%
Total Debt to Equity 179.5%
Interest Coverage 10
Management Effectiveness
Return On Assets 10.7%
Ret/ On Assets - 3 Yr. Avg. 9.4%
Return On Total Capital 13.2%
Ret/ On T. Cap. - 3 Yr. Avg. 11.3%
Return On Equity 35.8%
Return On Equity - 3 Yr. Avg. 27.2%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 46.2%
Gross Margin - 3 Yr. Avg. 44.7%
EBITDA Margin 33.3%
EBITDA Margin - 3 Yr. Avg. 31.9%
Operating Margin 26.2%
Oper. Margin - 3 Yr. Avg. 24.5%
Pre-Tax Margin 23.2%
Pre-Tax Margin - 3 Yr. Avg. 21.3%
Net Profit Margin 16.9%
Net Profit Margin - 3 Yr. Avg. 15.1%
Effective Tax Rate 38.6%
Eff/ Tax Rate - 3 Yr. Avg. 37%
Payout Ratio 0%

FISV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FISV stock intrinsic value calculation we used $5823 million for the last fiscal year's total revenue generated by Fiserv, Inc.. The default revenue input number comes from 0001 income statement of Fiserv, Inc.. 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 FISV stock valuation model: a) initial revenue growth rate of 2.3% 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 8.5%, whose default value for FISV is calculated based on our internal credit rating of Fiserv, Inc., 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 Fiserv, Inc..
    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 FISV stock the variable cost ratio is equal to 73.1%.

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 FISV 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 5.4% for Fiserv, Inc..

Corporate tax rate of 27% is the nominal tax rate for Fiserv, Inc.. 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 FISV 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 FISV are equal to 72.5%.

Life of production assets of 14.5 years is the average useful life of capital assets used in Fiserv, Inc. 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 FISV is equal to -3.4%. 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 - $2293 million for Fiserv, Inc. - 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 391.929 million for Fiserv, Inc. 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 Fiserv, Inc. at the current share price and the inputted number of shares is $34.1 billion.

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