Fiserv (FISV) is currently trading at premium valuations as compared to its peers. PBV (price-to-book-value) ratios are commonly used to compare financial services firms. Generally, these stocks trade between one to two times its book value. Stocks trading at lower prices than their book values can attract investor attention as they are considered to be generating extremely poor returns.
Fiserv is trading at a PBV of 9.4x and a one-year forward PE of 27.7x, while peers Fidelity Information Services (FIS) and Jack Henry & Associates (JKHY) are trading at a significant discount to FISV, with PBV multiples of 2.7x and 7.2x, respectively. Meanwhile, Equifax (EFX) has a PBV ratio of 5.3x. Such premium valuations coupled with FISV’s growth in the past few years makes it expensive at current valuations.
Notably, in 2016, Fiserv’s stock underperformed the financial sector as well as the broader market. The Financial Select Sector SPDR ETF (XLF), which represents the financial sector, has risen 22.0%. By comparison, FISV has risen 16.0% so far this year. Peers Fidelity Information Services (FISV) and Jack Henry & Associates (JKHY) have risen 25% and 14.0%, respectively, in 2017.