Global Payments Scales Up Yet Again

The lucrative and growing payments market is one that increasingly rewards scale, and the leading players are acting accordingly. First Data (FDC) and Fiserv (FISV) are pairing up, as are Fidelity National (FIS) and Worldpay (WP). While not on the same scale, JPMorgan (JPM) is also scaling up, recently announcing the $500 million acquisition of InstaMed to target the fast-growing healthcare payments vertical. Not to be outdone (or left behind), Global Payments (GPN) has announced an acquisition of Total System Services (TSS) that should boost it to around 8% share of the U.S. acquiring market while filling in some gaps in its covered verticals.

Fintech is still hot, and although not every analyst or investor is sold on Global Payments’ strategy of using wholly-owned software offerings to drive customer acquisition and retention for its payments business, the shares seldom trade at much of a discount. Although I don’t think Global Payments is particularly cheap, I believe today’s share price is a relatively fair reflection of the value of the business at this point.

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Global Payments Scales Up Yet Again

FIS Prized For Its Leverage To Bank IT Investments

I was fairly lukewarm on FIS (FIS) back in May of this year, and the shares have since risen another 5% or so – keeping pace with the S&P 500 but largely sitting out the strong ongoing run in fintech names, as peers/comps like Jack Henry (JKHY), Worldpay (WP), Fiserv (FISV), and Total System Services (TSS) have shot higher as Wall Street seemingly can’t get enough of the fintech sector growth story.

As it concerns FIS, while I like the story of leveraging ongoing growth in bank IT investment, including a growing willingness to outsource as “keeping up with the Morgans” with internally-developed systems becomes prohibitively expensive, I just don’t see the growth here to support a substantially higher share price. Outsourcing among banks could perhaps inflect more strongly than I expect, or FIS could perhaps migrate a bit further down-market from its core Tier 1/Tier 2 bank focus, but this remains a stock where I understand the fundamental drivers but struggle to make more sense of the valuation and expectations.

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FIS Prized For Its Leverage To Bank IT Investments

Fidelity National Information Services Offsetting Growth With Margins

Fidelity National Information Services (FIS) has been a so-so performer since my last update on the company in August of 2017. Although the shares are up around 10% since then, slightly better than the S&P 500, the shares have lagged Fiserv (FISV) and Jack Henry (JKHY). I believe this underperformance is due at least in part to FIS's slow pace of organic growth and the challenges the company faces in accelerating that growth to a meaningful degree.

Providing banking and payments technology to banks and other financial institutions remains a good business on balance, and FIS has opportunities to drive further margin leverage and/or pursue value-additive M&A. Even so, the total return potential here looks somewhat lackluster, suggesting the shares are an okay hold but not an especially exciting buy candidate.

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Fidelity National Information Services Offsetting Growth With Margins

Fidelity National Information Services Looks Ready To Grow Again

I can't say that FIS (NYSE:FIS) (also known as Fidelity National Information Services) hasn't felt more love this year. While some growth concerns have stalled out the stock a few times in the last three years, the shares have risen more than 20% year to date, outperforming peers like Fiserv (NASDAQ:FISV) and Jack Henry (NASDAQ:JKHY) and more or less keeping pace with First Data (NYSE:FDC). 

While FIS certainly isn't as cheap as it was, the shares still hold some appeal as the company looks toward improving underlying conditions. Not only is management executing very well with its integration of Sungard, it's leveraged to expanding interest margins among its bank customers, aging IT infrastructure, and growth overseas. With the potential to drive FCF growth in the high single digits to low double-digits, FIS's share price could approach $100.

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Fidelity National Information Services Looks Ready To Grow Again

Seeking Alpha: Euronet's Strong Move Underlines The Business Improvements

By no means is Euronet (EEFT) an unnoticed or unappreciated improvement story. With all three of the company's business segments looking stronger, shares of this financial services company have more than doubled in the past year. There are still several attractive avenues for growth in this company, but investors probably ought to moderate their expectations for further appreciation given the big move and the current valuation.

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Euronet's Strong Move Underlines The Business Improvements

Investopedia: Legal Unknowns Cloud Lender Processing Services Outlook

The fallout of the housing bubble and crash is still sorting out, but it looks like we're now at the point where regulators are going hunting for trophies to display to their still-angry voting constituents. While major banks continue to seek settlements for their part in the wrong-doing, Lender Processing Services (NYSE:LPS) is also finding itself in the crosshairs. Although this company's strong data and service offerings is likely to survive this mess on an operational basis, the legal liabilities and regulatory uncertainties could well weigh on the shares for some time to come.

Underlying Business Conditions Are Tough  
Absent some charges and adjustments, it was pretty clear from LPS's fourth quarter that operating conditions are still difficult. Revenue was down 14% this quarter, as transactions services revenue plunged 21% on lower default and loan facilitation service revenue. The company's data and analytics business fared reasonably well, though, and saw roughly 5% growth.

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Investopedia: Intuit A Stealth Play On Multiple Growth Markets

Intuit (Nasdaq:INTU) is still, likely, best known for its tax software, and the various small to medium-sized business software packages (like QuickBooks) that it offers. What is not so well-known, though, is that Intuit is actually a large software as a service (SaaS) provider, and a growing player in markets like payroll, payment solutions and bank infrastructure. While Intuit likely suffers a bit from "neither fish nor fowl syndrome," and less impressive growth than cloud computing titans like Salesforce.com (NYSE:CRM) and VMware (NYSE:VMW), this is a surprisingly complicated yet high-return company.

Decent Results in a Slow First Quarter  
For better or worse, Intuit is still at a point in its life cycle where seasonality matters. To that end, this fiscal first quarter, a quarter in which there is little demand for tax software, is a fairly sleepy one. Nevertheless, reported revenue rose 12%, and the company posted a 13% growth in its small business segment, as subscriber growth for products like QuickBooks Online, QuickBooks Enterprise Solutions and online payroll was all quite good.

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http://stocks.investopedia.com/stock-analysis/2011/Intuit-A-Stealth-Play-On-Multiple-Growth-Markets-INTU-HRB-CRM-ORCL-GOOG-MSFT-PAYX-VMW1122.aspx