Fiserv (FISV) Rides on Acquisitions, Debt Woes Continue
Fiserv, Inc. FISV is currently benefiting from its size and scale of operations, cost reduction efforts and strategic acquisitions.
Fiserv recently reported first-quarter 2021 adjusted earnings per share of $1.17 that beat the Zacks Consensus Estimate by 3.5% and increased 18.2% year over year. Adjusted revenues of $3.56 billion missed the consensus estimate by 0.1%.
Focus on Quality Improvement, Acquisitions
Fiserv continues to focus on improving product and service quality through leveraging its size and scale of operations, reducing costs and effectively integrating First Data operations to fend off competitors like Equifax EFX, Global Payments GPN and Fidelity National Information Services FIS. The company is streamlining its overall cost structure through rationalization of duplicate costs in order to attain planned cost synergies.
The company is expanding its product portfolio through strategic acquisitions. The recent acquisition of Ondot Systems is expected to enhance its digital capabilities, thus strengthening its competitive position. In 2020, the company acquired MerchantPro Express, Bypass Mobile and Inlet. While MerchantPro expands its merchant services business, Bypass enhances its omni-commerce capabilities and Inlet boosts its digital bill payment strategy.
Debt Woes Stay
Fiserv’s total-debt-to-total-capital ratio of 0.39 was higher than the industry’s 0.38 at the end of first-quarter 2021. A higher debt-to-capitalization ratio indicates increased risk of insolvency in challenging times.
Further, the company’s cash and cash equivalent of $831 million at the end of the quarter was well below the long-term debt level of $20.8 billion. This indicates that the company doesn’t have enough cash to meet this debt burden. However, the cash level can meet the short-term debt of $399 million.
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