What is FISV's Intrinsic value?

Fiserv Inc (FISV) Intrinsic Value Analysis

Executive Summary

As of June 9, 2025, Fiserv Inc's estimated intrinsic value ranges from $37.15 to $143.16 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $143.16 +25.3%
Discounted Cash Flow (5Y) $119.34 +4.5%
Dividend Discount Model (Multi-Stage) $84.70 -25.9%
Dividend Discount Model (Stable) $78.12 -31.6%
Earnings Power Value $37.15 -67.5%

Is Fiserv Inc (FISV) undervalued or overvalued?

With the current market price at $114.23, the stock appears to be fairly valued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Fiserv Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 4.2% 4.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 0.92 1
Cost of equity 8.1% 10.5%
Cost of debt 5.0% 5.0%
Tax rate 18.5% 19.5%
Debt/Equity ratio 0.3 0.3
After-tax WACC 7.2% 9.0%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 8.1% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $17,737 (FY12-2022) to $28,509 (FY12-2032)
  • Net profit margin expansion from 13% to 23%
  • Capital expenditures maintained at approximately 7% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $119 $95,476M 81.3%
10-Year Growth $143 $110,442M 67.2%
5-Year EBITDA $73 $66,185M 73.0%
10-Year EBITDA $96 $81,036M 55.3%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.3%
  • Long-term growth rate: 4.0%
  • Fair value: $84.70 (-25.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.5% (Low) to 8.1% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $38 to $118
  • Selected fair value: $78.12 (-31.6% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $3,434M
Discount Rate (WACC) 8.9% - 7.0%
Enterprise Value $38,596M - $49,111M
Net Debt $20,516M
Equity Value $18,080M - $28,595M
Outstanding Shares 628M
Fair Value $29 - $46
Selected Fair Value $37.15

Key Financial Metrics

Metric Value
Market Capitalization $70515M
Enterprise Value $90050M
Trailing P/E 27.87
Forward P/E 24.47
Trailing EV/EBITDA 9.30
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.30

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 30% $42.95
Discounted Cash Flow (5Y) 25% $29.83
Dividend Discount Model (Multi-Stage) 20% $16.94
Dividend Discount Model (Stable) 15% $11.72
Earnings Power Value 10% $3.72
Weighted Average 100% $105.16

Investment Conclusion

Based on our comprehensive valuation analysis, Fiserv Inc's weighted average intrinsic value is $105.16, which is approximately 7.9% below the current market price of $114.23.

Key investment considerations:

  • Strong projected earnings growth (13% to 23% margin)
  • Consistent cash flow generation

Given these factors, we believe Fiserv Inc is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.