Last update on 2024-06-06

Fidelity National Information Services (FIS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

In-depth Piotroski F-Score analysis for Fidelity National Information Services (FIS) for 2023, evaluating profitability, liquidity, and efficiency criteria.

Short Analysis - Piotroski Score: 6

We're running Fidelity National Information Services (FIS) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score assesses Fidelity National Information Services (FIS) based on 9 criteria about profitability, liquidity, and operating efficiency, scoring a 6 out of 9. FIS shows strengths in profitability and operating efficiency areas but has concerning points in liquidity and leverage.

Insights for Value Investors Seeking Stable Income

FIS seems like a solid investment due to its strengths in profitability and cash generation. However, potential investors should be cautious because of its increasing debt and reducing liquidity. Consider researching more about the factors contributing to its debt and whether these are one-off events or ongoing concerns before investing.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Fidelity National Information Services (FIS)

Company has a positive net income?

Explain the criterion for Fidelity National Information Services (FIS) and why it is important to consider

The Piotroski criterion assesses whether a company has a positive net income in the current year. This is important because consistent net profitability is a fundamental indicator of financial health.

Company has a positive cash flow?

Assessing the Cash Flow from Operations (CFO) criterion involves determining whether the company is generating a positive cash flow from its core operating activities. This criterion is crucial as it represents the company's ability to generate sufficient cash flow to maintain and grow its operations without relying on external financing.

In 2023, Fidelity National Information Services (FIS) reported a positive CFO of $4,335,000,000. This is indicative of strong operational performance and aligns with a historical trend of predominantly positive cash flows over the last 20 years. Given the substantial increase in CFO from 2012 onwards, with figures consistently above $1 billion, and peaking at approximately $4.8 billion in 2020, this positive trend contributes beneficially to the Piotroski Score. As such, FIS is awarded 1 point for this criterion in the Piotroski Analysis, reflecting its robust ability to generate cash from operations and enhancing its financial health.

Return on Assets (ROA) are growing?

ROA (Return on Assets) measures a company's efficiency at generating profit from its assets. Increased ROA indicates improved financial health.

In 2023, Fidelity National Information Services (FIS) posted an ROA of -0.1124, an improvement from -0.2287 in 2022. This positive trend suggests that FIS is becoming more efficient, although it is still in negative territory. Compared to the last 20 years of industry median ROA, which consistently stayed positive around 0.3, FIS is underperforming significantly. Nonetheless, the upward shift is a positive development, adding 1 point in the Piotroski Analyses.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income: This criterion evaluates if the company's operating cash flow as reported in the cash flow statement surpasses its net income as reported in the income statement. A positive result is a hint of strong earnings quality and suggests that profits are supported by real cash flows.

In 2023, Fidelity National Information Services (FIS) had an operating cash flow of $4,335,000,000 compared to a net income of -$6,654,000,000. The operating cash flow surpasses the net income by a significant margin. This is a positive indicator, earning 1 point in the Piotroski Analysis. This trend suggests that FIS's earnings are supported by actual cash flows, despite the net income being negative. Over the last 20 years, FIS has shown fluctuating yet mostly positive operating cash flows, reaching their highest values in recent years. The consistent disparity between cash flow and net income in 2022-2023 indicates substantial non-cash expenses or accounting adjustments impacting net income.

Liquidity of Fidelity National Information Services (FIS)

Leverage is declining?

Leverage examines the proportion of debt a company uses to finance its assets. Lower leverage indicates a stronger balance sheet with less debt, reducing financial risk.

Fidelity National Information Services (FIS) saw its leverage increase from 0.228 in 2022 to 0.2386 in 2023. This trend is negative as higher leverage means greater reliance on debt, elevating the company's financial risk. Historical data shows that leverage peaked dramatically in 2005 at 2.6022, indicating that FIS has been working to correct its debt over time. While the trend over recent years shows more stability, the increase from 2022 to 2023 suggests potential concerns about FIS's debt management.

Current Ratio is growing?

Current Ratio measures a company's ability to pay off its short-term liabilities with its short-term assets. It is important as it indicates financial stability and liquidity; a higher ratio signifies better short-term financial health.

The Current Ratio for Fidelity National Information Services (FIS) has slightly decreased from 0.7901 in 2022 to 0.7527 in 2023. Therefore, it does not warrant a point according to the Piotroski criteria. Historically, the trend for FIS shows a gradual decline from previous years, contrasting with industry medians which have maintained relatively higher ratios. This decrease can suggest reduced liquidity positioning that might concern investors seeking stable financial health in the short term.

Number of shares not diluted?

The change in shares outstanding is a key criterion in the Piotroski score. A reduction in shares outstanding usually indicates that the company is buying back its shares, which can be seen as a positive signal as it may reflect management's confidence in the company's future and can lead to higher earnings per share.

Based on the provided data, the outstanding shares for Fidelity National Information Services (FIS) decreased from 604,000,000 in 2022 to 591,000,000 in 2023, a reduction of 13,000,000 shares. This decrement suggests that the company is engaging in share buybacks. Historically, the outstanding shares have fluctuated, reaching a peak of 619,000,000 in 2020. The most recent reduction in 2023 adds 1 point to the Piotroski score as it is a positive indicator of potential shareholder value enhancement.

Operating of Fidelity National Information Services (FIS)

Cross Margin is growing?

Change in Gross Margin examines if a company’s Gross Margin has improved over the past year. Higher Gross Margins typically indicate better profitability and efficiency in cost management.

The Gross Margin for Fidelity National Information Services (FIS) increased from 0.3604 in 2022 to 0.3743 in 2023. This improvement earns FIS an additional point on the Piotroski scale. Historical analysis over the last twenty years shows that FIS’s Gross Margin has grown from 0.2784 in 2003 to its current 0.3743. Notably, FIS’s Gross Margin consistently outperforms the industry median, which stands at 0.3391 in 2023. This trend is favorable, underscoring FIS’s efficiency in managing its production costs relative to its peers.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company utilizes its assets to generate sales revenue. A higher ratio indicates better performance.

For Fidelity National Information Services (FIS), the Asset Turnover ratio has increased from 0.1329 in 2022 to 0.1659 in 2023. This increase is a positive signal as it suggests improved asset utilization. Looking at the historical data of the past 20 years, it is clear that FIS has faced fluctuations, with the ratio peaking at 1.3656 in 2003 and hitting a low of 0.112 in 2021. The recent uptick in 2023 represents a recovery and improving efficiency.