3 Reasons Why Growth Investors Shouldn't Overlook Fiserv (FI)

Growth investors often seek stocks that demonstrate above-average financial growth. Such growth is appealing as it can attract market attention and yield attractive returns. However, identifying a truly valuable growth stock can be challenging.

Historically, growth stocks tend to carry higher levels of risk and volatility. If a company is nearing the end of its growth phase, investing in it could lead to considerable losses.

Fortunately, tools like the Zacks Growth Style Score help investors discover promising growth stocks by examining a company’s genuine growth potential beyond traditional metrics.

Currently, Fiserv (FI) is recognized as a strong growth prospect by our analytical system. Alongside a solid Growth Score, it also boasts a top Zacks Rank.

Research indicates that stocks with outstanding growth features consistently outperform the broader market. This trend is even more pronounced among stocks that achieve a Growth Score of A or B and hold a Zacks Rank of #1 (Strong Buy) or #2 (Buy).

Here, we present three critical reasons why Fiserv stands out as an excellent growth choice:

Earnings Growth

When it comes to investing, earnings growth is paramount. Investors typically target increasing profit levels, and double-digit growth in earnings per share (EPS) indicates attractive forward momentum. Fiserv has a historical EPS growth rate of 18.8%. More importantly, analysts predict a 16.5% increase in EPS for this year, surpassing the industry average growth of 16.3%.

Cash Flow Growth

Cash flow is essential for any business, but growth-oriented companies benefit even more from higher cash flow growth. Such growth allows them to expand operations without relying heavily on external funding sources. Currently, Fiserv's year-over-year cash flow growth stands at 5.1%, surpassing many competitors in its sector, and the industry average of 4.3%. Furthermore, over the past 3-5 years, the company has achieved an impressive annualized cash flow growth rate of 33.5%, compared to the industry average of 12.7%.

Promising Earnings Estimate Revisions

Analyzing earnings estimate revisions provides additional insight into a stock’s performance outlook. A positive trend in earnings estimates typically correlates with increased stock prices. For Fiserv, there have been recent upward revisions in current-year earnings estimates, with the Zacks Consensus Estimate climbing by 0.2% over the past month.

Conclusion

With a solid Growth Score of B and a Zacks Rank #2, Fiserv is well-positioned for potential outperformance in the market. Its favorable earnings growth, strong cash flow trends, and positive earnings revisions signify it as a promising option for growth investors to consider.

growth, investing, stocks