Let's talk about the popular Fidelity National Information Services, Inc. (NYSE:FIS). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Fidelity National Information Services’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Is Fidelity National Information Services still cheap?
According to my valuation model, Fidelity National Information Services seems to be fairly priced at around 5.36% above my intrinsic value, which means if you buy Fidelity National Information Services today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $136.72, there’s only an insignificant downside when the price falls to its real value. What's more, Fidelity National Information Services’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Fidelity National Information Services?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Fidelity National Information Services' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in FIS’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on FIS, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Every company has risks, and we've spotted 3 warning signs for Fidelity National Information Services you should know about.
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This article by Simply Wall St is general in nature. 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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