Assessing Fiserv After 2024 Share Price Slump and Digital Payments Expansion

• Wondering if Fiserv is quietly turning into a value opportunity after a rough stretch, or if the market is still getting it wrong on price?
• Despite being down about 66.1% over the last year and 66.8% year to date, the stock has shown flickers of life recently, rising 2.6% in the last week and 9.0% over the past month to close around $68.33.
• Recent headlines have focused on Fiserv doubling down on its role in digital payments and banking infrastructure, including ongoing integrations of its tech stack across merchants and financial institutions. At the same time, investors are watching competitive moves from fintech rivals and large banks, which helps explain the volatility in how the market is pricing Fiserv's future.
• On our framework, Fiserv scores a solid 5/6 valuation score, suggesting it looks undervalued on most checks. Next, we will compare what different valuation methods say about that pricing, before finishing with a more holistic way to think about what Fiserv is really worth.

Find out why Fiserv's -66.1% return over the last year is lagging behind its peers.

Approach 1: Fiserv Excess Returns Analysis

The Excess Returns model estimates what shareholders earn above the basic cost of equity by comparing Fiserv's return on equity to the return investors demand, and then projecting how long those extra profits can be sustained.

For Fiserv, book value is about $46.78 per share, while stable earnings per share are estimated at $9.74, based on forward return on equity forecasts from eight analysts. With an average return on equity of 17.02% versus a cost of equity of $5.14 per share, the model calculates an excess return of roughly $4.60 per share. This suggests the company is creating meaningful value on each dollar of equity.

Using a stable book value projection of $57.23 per share, informed by four analysts, the Excess Returns approach arrives at an intrinsic value near $137.46 per share. Versus the recent share price around $68.33, this implies Fiserv could be about 50.3% undervalued on this framework. This indicates the market may be heavily discounting its ability to keep generating high returns on capital.

Result: UNDERVALUED

Our Excess Returns analysis suggests Fiserv is undervalued by 50.3%. Track this in your watchlist or portfolio, or discover 913 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Fiserv.

Approach 2: Fiserv Price vs Earnings

For a profitable business like Fiserv, the price to earnings ratio is a straightforward way to gauge how much investors are paying for each dollar of current earnings. In general, faster growth and lower perceived risk justify a higher PE multiple. Slower growth or higher risk usually means a lower, more conservative PE is appropriate.

Fiserv currently trades on a PE of about 10.19x, which sits well below the Diversified Financial industry average of roughly 13.59x and far under the broader peer group average of around 59.58x. Simply Wall St also calculates a Fair Ratio of 19.98x, its proprietary estimate of what a reasonable PE should be once you factor in Fiserv's earnings growth prospects, risk profile, profit margins, industry positioning and market cap.

This Fair Ratio is more informative than simple peer or industry comparisons because it adjusts for the specific drivers of Fiserv's value rather than assuming all companies deserve the same multiple. Comparing the current 10.19x PE to the 19.98x Fair Ratio indicates that the market is pricing Fiserv below the level implied by these fundamentals.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1462 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Fiserv Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an approach that lets you attach a clear story and set of assumptions to the numbers behind a company’s fair value, including its future revenue, earnings and margins.

A Narrative on Simply Wall St is a simple, structured way for you to spell out what you think will happen to a business, link that story directly to a financial forecast, and then translate it into a fair value estimate you can compare with today’s price to help decide whether to buy, hold, or sell.

Available within the Community page on Simply Wall St, Narratives are easy to create and follow, are used by millions of investors, and are updated dynamically as new information such as earnings releases, guidance changes or major news hits the market. This means your view of fair value moves with the facts rather than lagging them.

For Fiserv, for example, a more optimistic Narrative might lean toward analyst targets closer to $250 per share, while a cautious one might sit nearer $125. By comparing each Narrative’s fair value to the current price you can quickly see which story you find more reasonable, how much potential upside or downside it implies, and whether the stock still fits your strategy.

Do you think there's more to the story for Fiserv? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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