Fiserv *(FISV) Stock Looks Good, With Less Risk Than CHTR

Ajouté : 2026-05-22

[00:00:00]Good day fellow investors. Furf stock update. The stock is down 80% from its peak just a year and something ago. It is one of Michael Bur's top portfolio positions. So we're going to discuss in that the risk and reward of the situation. We have already discussed it when it crashed 50% in one day which was a staggering blow. But now things have stabilized and we have to see after the scare what's the reality and what's the fundamentals and what's the potential return. For those who don't know me my name is Sen. I have been investing for a quarter of a century now eight years on my research platform trying to find value investment strategies investments portfolios. I did my 16.4% 4% over the last eight years per year, not over the whole eight years, a little bit more.

[00:00:54]So, if you're interested in a value addition to your wealth portfolio strategy, check my research platform in the link in description below. And now, let's dig into Furf. The first thing when you look at the guidance here is adjusted earnings per share 8 bucks.

[00:01:12]Eight bucks per share. Compare that to the stock price. The P ratio for 2026 will likely be seven. Seven. The market's P ratio is 30. This is seven.

[00:01:26]What's going on? Is the situation so terrible? Is this a company priced for extinction? Let's see. But then I immediately check the debt because as we discussed yesterday with charter communications their interest rates have been going up which means there are bankruptcy issues. If you look at ferf's debt over the last few years interest rates have gone up and down but mostly flat and when you compare the current 2023 yield with the 10-year US government yield it's not far from US government bonds. The list of debt all investment grade now current coupons are around four five percent.

[00:02:10]This is not junk. The bond market is seeing how it will likely get its money with a very high degree of certainty. So if the company is not going bankrupt has an EPS of eight maybe as the situation from the panic and the scare reverts P ratio 15 * 8 that's a 2x just like that in a year year and a half from a bond debt perspective it's way less risky than charter communications if you look at the situation there the CEO is open about the issues about how they are working they had their investor they will discussed that and I think it's seven it's a maximum position with Michael Bur very interesting they even in the investment day say that their target is earnings per share of 12 bucks per share times 15 that in my maths is 180 that's a 3x and that could happen in the next three years 3x in three years is pretty strong upside for a business that's not going bankrupt thus much less risk now they had the investor But they summarized it perfectly with the JP Morgan Global Technology Conference.

[00:03:25]Tianin Huang asked the questions to the CEO Michael Lions and give us the elevator pitch of why and how Ferve is going to get back to being a steady compounder. We are not talking here extension business. We are talking back to compounding something that it was over the last 15 years. Then they discuss the standard mission critical services to two massive markets that will discuss banking, commerce, payments, all the AI mambo jumbo there.

[00:03:59]However, if they manage to get back to that compounding highly recurring revenue, positive leverage, all the embedded things that they have and then drive it to free cash flow conversion, growing back to growth, plus the no major changes in how they return capital to shareholders with the majority of going to share buybacks, share buybacks, P ratio of seven, that is a win for shareholders. How are you going to grow that in the second half of the year?

[00:04:32]Because the guidance is that they will decline still 2% in Q2 and then from there the key question is second part of 2026 they should be back to growth and the CEO says it here low single digits decline then normalizing and then going back to accelerated growth in the second half of the year. new contracts that they have. There is inflation of 4%. The payment company should benefit from that. Existing enterprise clients, existing plant client activity ramp ups, existing products and free variety of different products. Clover capital on Clover that's still growing 6 to 8% per year. And long-term if they keep adding 2% of growth per year their target is to get to the 6 4 6 8% but as soon as they start growing they will not have a P ratio of seven it will go to 15 and you have already made your money let's look a little bit at the business to see what's going on what are they changing and how are they positioned from a risk and reward perspective who we are merchant solution 10 billion revenue huge market financial solutions 10 billion revenue huge market now they want to grow winning new clients adding new products to that if they manage that it will be a great success as it has been just two years ago with one of the best stock rises that I have seen a lot of distribution a lot of customers issuers accounts everything they are everywhere you they need to be they have been a little bit slow over time to tackling that competition. They went for profitability the previous CEO but they are strongly embedded with all different kinds of clients. They have unmatched breath of capabilities. Number one, number one, number one. And if they can stabilize that, keep the profits, increase the value to customers, then they should return to less churn, things improving, and then you get a revaluation by the market. They are committing to four to six% growth, 12 bucks earnings per share in 2029. Just multiply this by seven and that's already a great return. I guarantee you that if they reach this the P ratio will go to 15 will not be to seven and they plan to keep on doing this 13.5 billion per cash flow that according to mindmath is 4.5 billion per year compared to the market capitalization here that's 15% free cash flow yield which is insane for a company that is the leader in many places. They plan to find new customers, add businesses, add ideas to those customers and so create new growth expecting stable trends going forward.

[00:07:46]Total merchant solutions 6 to 8% 2 to 4% growth 4 to 6% compounding rate. If they can do that will be great. Maybe some interesting M&A, not like the first data acquisition that perhaps didn't help that much. Perhaps it did. That's already a long time ago. Good revenue, improving margins, higher profitability, then the debt leverage on high cash flows is not that much of an issue, especially if they reach this. So, it's a very interesting situation. I have better for my personal portfolio on my research platform model portfolio better not yet perhaps diversified portfolio on my research platform and something that I plan launching on YouTube the YouTube portfolio because we can then all the ideas put somewhere to hold them together not just the quadrant that's something very interesting that furf offers a very interesting risk and reward situation especially can it go bankrupt. There can always be issues but much less likely than charter that we discussed yesterday. Not to take away from the risk and reward from the company from the position. When I look at the risks, if they had a mode, then what happened last year might not have happened. Could have they grown a little bit slower? They went for maximum profitability, not adding to customer quality, not investing. Okay, the debt is there which is there. are always not significant for now. Investment grade but always keep it in mind key factor the economy is still doing great. If that changes if there is a recession all the projections revert so 12 doesn't become 12 becomes four or six that's something to keep in mind. So there is still some downside. How much if you go in now leave for another purchase possibly and then that's it. Then you leave it for five years and see the master of these situations Peter Lynch he discussed this with the fast growers slow growers stock categorization a must-see video. Check in the link in description below and there he discussed furf that we can categorize it as a turnaround. They explode on the upside when things improve, go bust when things don't improve, but ferf will not go bust. Understand whether the issues are as big as perceived. The issues might not be because they are still profitable. Eight bucks not 10 12 rate for creditors. Yes, it should be able to survive. turn around new clients. They need a good economy. Uh scaling on what they already have, adding those things that they didn't add to increase the quality of their products. Restructuring perceived well for now the market doesn't like it. One-time losses make buying opportunities that for sure. Are they cutting costs? Not really. They are investing looking good. I think that if you have five or 10 such bets in your portfolio, Michael Bur has 7% so perhaps too high for me for my diversified portfolio. But if you have five of those and three become free X's, one does nothing and one goes bankrupt, you still have a great return. I'll be updating comparing a little bit things next week likely in the quadrant update. Subscribe for that. Check my research platform in the link in description below if you are interested in a value investing strategy or component to your long-term wealth accumulation process.