Second alphabetically is U.S.-based Fiserv (FISV, Financial). Following its transformative acquisition of First Data Corporation in 2019, Fiserv is now a 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 revenues 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. We estimate this will produce near-term earnings per share growth of over 20%. Furthermore, with its significant free cash flow generation and excess debt capacity, the company should be able to return about 35% of its market capitalization through dividends and share repurchases over the next five years, in our view. We believe Fiserv offers an attractive risk-adjusted return potential for a well-managed business that trades for a market multiple of our estimate of normal earnings.
From David Herro (Trades, Portfolio)'s Oakmark Global Fund first-quarter 2021 shareholder commentary.
