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What Drove Fiserv’s 4Q16 Earnings Growth?

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4Q16 earnings

Fiserv (FISV) reported 4Q16 adjusted EPS (earnings per share) of $1.16 on revenues of $1.4 billion. Its net income of $215 million was 14% higher YoY (year-over-year).

The company’s Internal revenues rose 4% driven by growth in its Payments (up 6%) and Financial (up 2%) segments. Adjusted operating income increased to $435 million, from $394 million in the year-ago quarter.

Fiserv’s operating margins also rose to 32.1% from 30.7% in 4Q15. For fiscal 2016, Fiserv reported organic revenues of $5.5 billion and EPS of $4.15, representing a growth of 39% over 2015.

Generating revenue and growth

The company operates on long-term contracts with its clients, thereby generating recurring and steady revenues. The company does not currently pay dividends to its shareholders, which provides sufficient capital for the company’s operations, enabling it to grow inorganically via acquisitions.

The company expects to grow with the implementation of new technologies, including its Verifast palm vein reader, and its integration of its Corillian Online banking platform with Amazon’s Echo.

However, the company faces threat from increasing regulations in the financial sector (XLK) (XLF) as well as intensifying competition from rivals Fidelity Information Services (FIS), Equifax (EFX), and Jack Henry & Associates (JKHY).

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