Key Takeaways:
- The “Unbundled” Opportunity: Following the separation of Worldpay, FIS has emerged as a leaner, more focused compounder, trading at a discount to its historical valuation.
- Margin Expansion Story: The valuation model assumes a significant jump in profitability, with Operating Margins expanding to 19.5% as the company optimizes its core banking and capital markets businesses.
- Price Projection: The valuation model points to a target of $81 by 2027, suggesting substantial upside from the current suppressed levels.
- Compelling Returns: With an implied 18.1% annualized return, the model signals a “Strong Buy,” driven by a combination of multiple expansion and double-digit earnings growth.
Fidelity National Information Services (FIS) is a classic “spin-off” value play. After shedding the Worldpay business, the remaining company is a focused financial technology giant that the market has left for dead.
Management, led by CEO Stephanie Ferris, is currently on the road telling this “new chapter” story. At the recent UBS Global Technology Conference, the team emphasized that the noise in the GAAP numbers (due to the separation) is masking the underlying strength of the business.
CFO James Kehoe noted that while GAAP tax rates fluctuate based on “domestic vs. international mix,” the adjusted operational metrics are stabilizing.
Financially, the stock looks mispriced.
Trading at just $59, FIS is valued at a fraction of its historical multiples. The market is pricing it like a stagnant legacy player, but the valuation model suggests a growth turnaround is imminent.
What the Model Says for FIS Stock
This analysis evaluates FIS’s potential through 2027, factoring in a successful pivot to higher growth and operational efficiency.
The model signals a “Strong Buy.”
Using a forecast of 12.0% Revenue Growth (CAGR) and 19.5% Operating Margins, the model points to a target price of $81 by December 2027.
This implies a powerful 18.1% annualized return from today’s levels.
The model suggests that the current price of $59 is a floor. If FIS can deliver on the projected margin expansion, the combination of earnings growth and a re-rating to a standard market multiple drives significant alpha.
Estimate a company’s fair value instantly (Free with TIKR) >>>
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for FIS stock:
1. Revenue Growth: 12.0%
The model assumes a sharp acceleration.
While historical growth has been muted (3.1% over the last year), the “New FIS” is targeting a return to double-digit growth rates as it cross-sells into its massive banking client base.
The model forecasts a 12.0% CAGR, reflecting the “turnaround” thesis where the company regains its footing as a premier fintech compounder.
2. Operating Margins: 19.5%
Profitability is the key lever.
The model assumes Operating Margins will expand from the trailing 14.9% to 19.5% by 2027.
This 460-basis-point expansion is aggressive but achievable if the company executes on its cost-cutting and simplification promises post-divestiture.
3. Exit P/E Multiple: 9.5x
Even with a recovery, the valuation remains conservative.
The model assumes an exit multiple of just 9.5x.
This is a bargain-basement multiple for a software business. For context, FIS traded at 16.9x earnings on average over the last 10 years. By keeping the exit multiple low (single digits), the model builds in a massive “Margin of Safety.”
What Happens If Things Go Better or Worse?
The risk/reward profile is heavily skewed to the upside due to the low starting valuation (these are estimates, not guaranteed returns):
- Low Case: If the turnaround fails and margins stay flat, the low 9.5x multiple protects the downside, likely keeping the stock range-bound near $60.
- Base Case: With execution on margins (19.5%), the target is $81, delivering an 18.1% annual return.
- High Case: If the market re-rates FIS back to its historical 13x-14x multiple, the stock could easily clear $100, offering “multi-bagger” potential from these lows.
See what analysts forecast for the next 5 years for FIS stock (Free with TIKR) >>>
How Much Upside Does FIS Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
See a stock’s true value in under 60 seconds (Free with TIKR) >>>
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
