FIS recovers strongly after Q4 2016 results spark 3% share price drop

By Alex Hammond | 9 February 2017

The share price of global fintech provider FIS has bounced back to slightly over its pre-Q4 2016 financial report level, following a shock dip in Tuesday’s trading. It is of little surprise that market confidence has returned to the NYSE-listed tech supplier, as the financials we’re mostly positive, and the outlook has been strong throughout the past 12 months, with the FIS share price up approximately 25% since February 2016.

The share price dropped 3% by midday trading on Tuesday following the publishing of the report, despite FIS reporting adjusted earnings per share of $1.14, in line with Wall Street expectations, and up 22.6% year-on-year, from Q4 2015’s earnings per share of $0.93..

Other performance indicators also were broadly in line with analysts’ predictions. Organic growth came in at 4.8%, raising the full year organic revenue for 2016 in total to 4.6%, while revenues were reported at $2.44bn, $30m short of expected returns but a significant increase of Q4 2015’s revenue of $1.9bn.

In a call to analysts, FIS Senior Vice President of Corporate Finance and Investor Relations Peter Gunnlaugsson and President and CEO Gary Norcross praised FIS’s Q4 2016 and full year results, and were buoyant on the company’s outlook for the next 12 months, which has certainly contributed to the share price recovery.

Norcross told industry analysts, including representatives from Citigroup Global Markets, JPMorgan Securities, Goldman Sachs and Cantor Fitzgerald: “In the year, we exceeded our financial goals delivering total shareholder returns of 27%, and more than doubling the returns provided by the S&P 500. This was accomplished by delivering full-year financial results, encompassing 11% EBITDA growth, 19% adjusted earnings per share growth, $1.5 billion in free cash flow, and $341 million return to shareholders in dividends.

“We're significantly improved the revenue and margin profile of our Global Financial Solutions segment. With the full year of SunGard results through consistent growth of high margin, IP-led solutions, and cost synergies, we exceeded our integration commitments putting FIS ahead of schedule allowing us to increase our synergy targets twice in 2016.

“We're increasing them again, with the current overall target to now exceed $275 million exiting 2017. This continues our track record of delivering on and exceeding our synergy targets on large, transformational acquisitions. We also successfully divested the public sector and education businesses, bringing us capital to pay down debt, as well as to reinvest into our long-term core businesses within IFS and GFS.”

Indications from the market are that the marginal revenue miss was the major influence for the price fall, but with strong financials across the board and positive statements coming from senior management it is not surprising that confidence has returned. FIS shares rose 3.3% on Wednesday at $79.84.

In other fintech stock market news, cybersecurity provider Radware released its Q$ 2016 financials on Wednesday.

Earnings per share for Q4 2016 were reported at $0.06, beating analyst estimates by $0.01. Revenue for Q4 was reported $51.7m, approximately $1m more than expectations.

Revenues from the Americas were $22.7 million, representing 44% of total revenues; revenues from EMEA were $14.9 million (29% of the total), and revenues from APAC were $14.1 million, accounting for the remaining 27%.

Full year revenues were $196.6 million, down 9% from 2015. Revenues from the Americas were $84.7 million, representing 43% of total revenues; revenues from EMEA were $53.7 million or 27% of the total; and revenues from APAC were $58.1 million, accounting for the remaining 30%.

Although the financials were ahead of predictions, Radware’s numbers were unfavourable when year-on-year comparisons are made to 2015. Revenue dropped 6.5% in Q4 y-o-y, with earnings per share recorded at $0.17 in 2015.

Despite the deficit in revenue across the board in comparison to 2015’s results, the markets reacted positively to the report. The Radware share price closed at $15.48, a 5.45% increase on Tuesday’s closing price.

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