Fiserv (FISV)
We’re skeptical of Fiserv. Its weak sales growth and low returns on capital show it struggled to generate demand and profits.― StockStory Analyst Team
1. News
2. Summary
Why Fiserv Is Not Exciting
Powering over 1 billion accounts and processing more than 12,000 financial transactions per second globally, Fiserv (NYSE:FI) provides payment processing and financial technology solutions that enable merchants, banks, and credit unions to accept payments and manage financial transactions.
- Low return on equity reflects management’s struggle to allocate funds effectively
- Annual sales growth of 7% over the last five years lagged behind its financials peers as its large revenue base made it difficult to generate incremental demand
- On the plus side, its incremental sales over the last five years have been more profitable as its earnings per share increased by 16.6% annually, topping its revenue gains
Fiserv doesn’t meet our quality criteria. There’s a wealth of better opportunities.
Why There Are Better Opportunities Than Fiserv
Fiserv’s stock price of $63.69 implies a valuation ratio of 8x forward P/E. Fiserv’s valuation may seem like a bargain, but we think there are valid reasons why it’s so cheap.
Our advice is to pay up for elite businesses whose advantages are tailwinds to earnings growth. Don’t get sucked into lower-quality businesses just because they seem like bargains. These mediocre businesses often never achieve a higher multiple as hoped, a phenomenon known as a “value trap”.
3. Fiserv (FI) Research Report: Q3 CY2025 Update
Financial technology provider Fiserv (NYSE:FI) missed Wall Street’s revenue expectations in Q3 CY2025, with sales flat year on year at $5.26 billion. Its non-GAAP profit of $2.04 per share was 22.9% below analysts’ consensus estimates.
Fiserv (FI) Q3 CY2025 Highlights:
- Revenue: $5.26 billion vs analyst estimates of $5.69 billion (flat year on year, 7.6% miss)
- Pre-tax Profit: $964 million (18.3% margin, 49.5% year-on-year growth)
- Adjusted EPS: $2.04 vs analyst expectations of $2.65 (22.9% miss)
- Adjusted EPS guidance for the full year is $8.55 at the midpoint, missing analyst estimates by 15.8%
- Market Capitalization: $68.59 billion
Company Overview
Powering over 1 billion accounts and processing more than 12,000 financial transactions per second globally, Fiserv (NYSE:FI) provides payment processing and financial technology solutions that enable merchants, banks, and credit unions to accept payments and manage financial transactions.
Fiserv operates through three main segments: Merchant Acceptance, Financial Technology, and Payments and Network. The Merchant Acceptance segment offers solutions that allow businesses of all sizes to securely accept payments through physical point-of-sale systems or online channels. This includes Clover, a cloud-based operating system for small and mid-sized businesses, and Carat, an integrated platform for large enterprises.
The Financial Technology segment provides core account processing systems that financial institutions use to maintain customer deposit and loan accounts, manage ledgers, and handle essential banking operations. These solutions are complemented by digital banking platforms, financial management tools, and risk management services that help banks and credit unions serve their customers efficiently.
In the Payments segment, Fiserv delivers the infrastructure needed to process various payment types, including debit, credit, and prepaid card transactions. The company owns and operates payment networks like Accel, STAR, and MoneyPass, which connect financial institutions, merchants, and consumers. This segment also includes bill payment services, person-to-person payment capabilities, and prepaid solutions.
A typical client might be a regional bank that uses Fiserv's core processing platform to manage customer accounts, its digital banking solution to offer mobile banking services, and its payment processing infrastructure to handle debit card transactions. The bank pays Fiserv recurring fees for these services, creating a steady revenue stream. Similarly, a retail merchant might use Fiserv's Clover system to accept payments and manage inventory, paying transaction fees on each sale processed through the system.
4. Payment Processing
Payment processors facilitate transactions between merchants, consumers, and financial institutions. Growth comes from e-commerce expansion, declining cash usage globally, and value-added services beyond basic processing. Headwinds include margin pressure from merchant negotiating power, rapid technological change requiring investment, and emerging competition from technology companies entering the payments ecosystem.
Fiserv competes with other financial technology and payment processing companies including FIS (NYSE:FIS), Global Payments (NYSE:GPN), Jack Henry & Associates (NASDAQ:JKHY), and PayPal (NASDAQ:PYPL). In the merchant services space, it also faces competition from Block (NYSE:SQ) and Stripe (private).
5. Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Fiserv’s 7% annualized revenue growth over the last five years was mediocre. This wasn’t a great result compared to the rest of the financials sector, but there are still things to like about Fiserv.
Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Fiserv’s annualized revenue growth of 6.1% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
This quarter, Fiserv’s $5.26 billion of revenue was flat year on year, falling short of Wall Street’s estimates.
6. Pre-Tax Profit Margin
Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Payment Processing companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.
The pre-tax profit margin includes interest because it's central to how financial institutions generate revenue and manage costs. Tax considerations are excluded since they represent government policy rather than operational performance, giving investors a clearer view of business fundamentals.
Over the last four years, Fiserv’s pre-tax profit margin has fallen by 10.2 percentage points, going from 10.6% to 20.9%. However, fixed cost leverage was muted more recently as the company’s pre-tax profit margin was flat on a two-year basis.
In Q3, Fiserv’s pre-tax profit margin was 18.3%. This result was 5.9 percentage points better than the same quarter last year.
7. Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Fiserv’s EPS grew at a remarkable 16.6% compounded annual growth rate over the last five years, higher than its 7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Fiserv, its two-year annual EPS growth of 12.3% was lower than its five-year trend. This wasn’t great, but at least the company was successful in other measures of financial health.
In Q3, Fiserv reported adjusted EPS of $2.04, down from $2.30 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Fiserv’s full-year EPS of $9.16 to grow 23.9%.
8. Return on Equity
Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.
Over the last five years, Fiserv has averaged an ROE of 8.8%, uninspiring for a company operating in a sector where the average shakes out around 10%. We’re optimistic Fiserv can turn the ship around given its success in other measures of financial health.
9. Balance Sheet Assessment
The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.
If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.
Fiserv currently has $30.2 billion of debt and $25.14 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 1.1×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 3.5× for a financials business.
10. Key Takeaways from Fiserv’s Q3 Results
We struggled to find many positives in these results. Its revenue and EPS missed quite badly in the quarter, and full-year EPS guidance also fell short of Wall Street’s estimates. Overall, this was a bad quarter. The stock traded down 28.8% to $89.89 immediately after reporting.
11. Is Now The Time To Buy Fiserv?
Updated: November 16, 2025 at 11:41 PM EST
Before investing in or passing on Fiserv, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.
Fiserv’s business quality ultimately falls short of our standards. To begin with, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while Fiserv’s expanding pre-tax profit margin shows the business has become more efficient, its mediocre ROE lags the market and is a headwind for its stock price.
Fiserv’s P/E ratio based on the next 12 months is 8x. This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're fairly confident there are better stocks to buy right now.
Wall Street analysts have a consensus one-year price target of $95.84 on the company (compared to the current share price of $63.69).
Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.