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Sydnee Gatewood
Sydnee Gatewood
Articles (3388) 

Bill Nygren Comments on Fiserv

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January 11, 2021 | About:

Following its transformative acquisition of First Data Corporation in 2019, Fiserv is now the top provider of digital banking solutions, core account processing software and merchant acquiring services in the U.S. The company's mission-critical software and services generate highly recurring revenue and are tied to strong secular growth trends within both digital payments and banking. We expect Fiserv's revenue to grow in the mid- to high-single-digits over the coming years and that the company will enjoy significant margin expansion as it realizes the cost synergies from the First Data acquisition. In our estimate, this would produce near-term EPS growth of more than 20%. Furthermore, with its significant free cash flow generation and excess debt capacity, the company should be able to return nearly 40% of its market capitalization through dividends and share repurchases over the next five years. We believe the risk adjusted return potential is attractive for this well-managed, above-average business that's currently trading for a below-market multiple on our estimate of normal earnings.

From Bill Nyren's Oakmark Fund fourth-quarter 2020 commentary.

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