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Green&Gold Fund Recommendation: Buy Fidelity National Information Services (FIS)

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Presentation on theme: "Green&Gold Fund Recommendation: Buy Fidelity National Information Services (FIS)"— Presentation transcript:

1 Green&Gold Fund Recommendation: Buy Fidelity National Information Services (FIS)

2 Industry: Transaction Processing Services Leading provider of banking and payment technology solutions worldwide Serves over 14,000 institutions in over 100 countries Employs more than 32,000 people worldwide 4 Major Segments: Financial, Payment, International, and Corporate Solutions Account & Transaction processing software for financial institutions Risk/Fraud Mitigation Solutions Online & Mobile Payment Services Prepaid Solutions Fidelity National Company Profile

3 Vast opportunity for mobile payment services Global mobile transaction value & volume: From 2011 to 2012 over 60% increase in value to $170B and a 30% increase in users to 200M Expected average annual growth of 42% from 2011 to 2016 Estimated market value of $617B with 448M users by 2016 American Express recently chose (FIS) InstantFunds mobile technology Launched PayNet solution used for ecommerce, P2P, bill pay, mobile, and international money movement Increasing Demand for Mobile Banking

4 Mobile malware attacks hit record numbers in the Q3 from 28,000 to 175,000 FIS has been heavily investing in their Risk/Fraud Solutions Already experienced a 100% sales growth with their ID Authentication tool, which quickly authenticates identity prior to opening an account and issuing authorization Over 7,ooo institutions use FIS QualiFile to mitigate risk and automate deposit account origination As mobile adoption increases, so will the threats

5 Account Processing is the core infrastructure for financial institutions and has recently shifted towards outsourcing Vietinbank, one of the largest Vietnam commercial banks adopted FIS Profile which is a core banking software system to replace their old system Barclays adopted Profile to support the banks new online savings and CD products BMO Harris Bank chose FIS to improve its banking process Continued market growth for prepaid solutions: Has seen over 80 new prepaid client agreements worldwide Processed over 880M prepaid card transactions, totaling more than $40B in value in 2011 Account Processing & Prepaid Cards

6 Revenue was $1.4B in Q3 of 2011 and grew 2.8% Y/Y Organic revenue growth is up 5% YTD Financial Segment’s revenue alone grew 8.1% Y/Y to $565.7M EPS of $0.63 is up 4.1% Y/Y Gross margins expanded by 32.6% Operating margins increased by 20% Investment Information

7 Prev Close:36.10 1y Target Est:38.31 52wk Range:23.93--36.13 Avg Vol (3m):1,750,610 Market Cap:10.59B Beta0.75 EPS (Adj): 1.82 Div & Yield:0.80 (2.2%) Industry P/E:10.02 Forward P/E: 14.34 Strong Stock Performance 35.26% increase over past year

8 FIS Compared to Competitors FIS vs. S&P 500

9 We should own this stock due to its strong business growth, solid stock price performance, and the increasing demand for its mobile banking & risk/fraud mitigation services. Investment Thesis

10 SWOT Analysis Strengths  Strong stock performance and business growth  Solid financial position with reasonable debt levels  Increasing revenue growth and operating margins Weaknesses  International Solution’s revenue decreased by 0.7% in Q3  Relies heavily on North American revenue Opportunities  High growth potential  Increased demand for mobile banking and risk/fraud mitigation  Increased demand for account processing and prepaid solutions Threats  Strong competitors  Rapid technology turnover  Self-sufficient financial institutions that develop and use their own electronic payment and online banking solutions

11 Sector : Financials Industry Group: Transaction Processing Services Current Holdings: XLF, ASPS, VRSK, BAC Target Sector Allocation: 8.86% Current Sector Allocation: 10.91% BUY 138 shares of FIS at market price of $36.10 (approx. $4,981) Portfolio Placement / Recommendation


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