Fiserv (FI) Stock: Earnings Miss Sends Investors Running for the Hills

TLDR

• Fiserv shares dropped 44% on Wednesday, marking the company’s worst single-day decline in its history
• The company slashed full-year adjusted earnings guidance to $8.50-$8.60 per share from previous range of $10.15-$10.30
• Third quarter adjusted earnings came in at $2.04 per share, missing analyst estimates of $2.64 by $0.61
• Revenue grew slightly to $5.26 billion but fell short of the $5.35 billion consensus estimate
• Organic growth slowed dramatically to 1% from 8% in the previous quarter

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Fiserv had a day to forget. The fintech company’s stock plummeted 44% to $55.37 on Wednesday after it delivered disappointing third quarter results and dramatically reduced its full-year outlook.

Fiserv, Inc., FISV

The damage to shareholder value was immediate and severe. Shares were on track for their lowest close since January 3, 2019, when the stock finished at $70.11.

The company now expects adjusted earnings between $8.50 and $8.60 per share for the full year. This represents a sharp reduction from its July forecast of $10.15 to $10.30 per share.

The new guidance landed well below Wall Street expectations. Analysts tracked by FactSet had been projecting adjusted earnings of $10.15 per share.

Third quarter results painted a troubling picture. Fiserv reported adjusted earnings of $2.04 per share, missing the $2.64 analyst forecast by a wide margin.

Revenue grew slightly to $5.26 billion in the quarter. However, this figure still came in below the $5.35 billion consensus among analysts polled by FactSet.

The revenue growth slowdown caught attention. Organic growth ticked up just 1% in the quarter, a sharp deceleration from the 8% growth rate posted in the previous quarter.

Leadership Overhaul

The company announced several leadership changes alongside the disappointing financial results. Fiserv named a new finance chief and appointed co-presidents.

The timing of these moves raised eyebrows given the financial performance. Leadership transitions during periods of underperformance often signal deeper organizational challenges.

Analysts struggled to make sense of the magnitude of the miss. Jefferies analysts led by Trevor Williams called the earnings shortfall and guidance reduction “difficult to comprehend” in a research note.

They weren’t surprised by the market reaction. “We would not be surprised to see the stock down 40%+ today,” the Jefferies team wrote.

Market Reaction

The stock’s performance over the past year reflects growing concerns. Shares are down 36.86% over the last 12 months and have fallen 6.77% in the past three months alone.

Wall Street had been adjusting expectations even before this report. The company saw 21 negative earnings revisions in the last 90 days compared to just one positive revision.

Despite the poor showing, InvestingPro rates Fiserv’s financial health score as “good performance.” This rating now faces serious questions given the recent results.

The earnings miss of $0.61 per share represents one of the larger misses for a company of Fiserv’s size and profile. The revenue shortfall of roughly $90 million compounded investor disappointment.

The market had already been growing skeptical of Fiserv’s trajectory. Wednesday’s results confirmed those fears and then some.

The company’s previous guidance from July now looks wildly optimistic in hindsight. That forecast called for earnings up to $10.30 per share compared to the new maximum of $8.60.

According to the latest data, Fiserv’s stock closed at $126.17 before Wednesday’s decline and opened Wednesday trading around that level before the selloff began.

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