Fiserv Inc. (NASDAQ:FISV)

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrated a consistent upward trend over the five-year period. Starting at $1,176 million in 2017, it increased each year, reaching $1,797 million by the end of 2021. This progression indicates improving operational profitability after tax obligations.

Cost of Capital

The cost of capital remained relatively stable with minor fluctuations throughout the timeframe. It started at 11.48% in 2017 and showed a slight increase to 11.52% in 2018, followed by a gradual decline to 10.23% by 2021. This suggests a modest decrease in the company's required rate of return or risk perception over time.

Invested Capital

Invested capital exhibited a significant and abrupt increase from 2018 to 2019, rising from $9,909 million to $62,514 million. Subsequent years showed a slight decreasing trend to $59,700 million in 2021. This substantial one-time increase could be indicative of a large acquisition, capital investment, or accounting adjustment, followed by stabilization at the elevated capital base.

Economic Profit

Economic profit presented a strong positive value in 2017 and 2018 ($120 million and $181 million, respectively), but shifted dramatically to large negative values in subsequent years (-$5,056 million in 2019, -$4,682 million in 2020, and -$4,307 million in 2021). This trend reflects that despite growing NOPAT, the significant rise in invested capital combined with the cost of capital led to substantial economic losses, highlighting potential challenges in generating returns exceeding capital costs after 2018.

The analysis of the annual financial data reveals mixed trends in profitability measures over the five-year period ending December 31, 2021.

Net Income Attributable to Fiserv, Inc.

The net income shows some volatility throughout the years. From 2017 to 2018, it decreased slightly from 1246 million USD to 1187 million USD. A more significant decline occurred between 2018 and 2019, dropping to 893 million USD. However, this was followed by a modest recovery in 2020 to 958 million USD and a substantial increase in 2021 to 1334 million USD, surpassing the initial 2017 level. This pattern indicates a dip in profitability midway through the period, followed by a strong rebound in recent years.

Net Operating Profit After Taxes (NOPAT)

NOPAT displayed a consistent upward trajectory over the entire five-year span. It increased from 1176 million USD in 2017 to 1322 million USD in 2018, with further growth to 1565 million USD in 2019. This positive trend persisted in 2020 at 1728 million USD and reached 1797 million USD by the end of 2021. The steady rise in NOPAT suggests improving operational efficiency and profitability after taxes despite fluctuations in net income.

Overall, while net income faced a decline mid-period before a recovery, NOPAT steadily improved year-over-year, indicating strengthening core operating performance. The divergence between net income and NOPAT trends could be attributed to factors such as non-operating items, tax effects, or one-time charges influencing net income figures differently than operating profit metrics.

The financial data reveals varying trends in tax-related expenses over the five-year period ending in 2021.

Income Tax Provision

The income tax provision exhibits fluctuations without a clear linear trend. Starting at 158 million USD in 2017, it more than doubled to 378 million USD in 2018. This was followed by a significant reduction to 198 million USD in 2019 and stability around 196 million USD in 2020. In 2021, there was a notable increase to 363 million USD, approaching the 2018 level. This pattern suggests variability in taxable income, tax rates, or tax planning outcomes over the years.

Cash Operating Taxes

The cash operating taxes show a different pattern characterized by an initial decrease from 471 million USD in 2017 to 288 million USD in 2018 and a further decline to 255 million USD in 2019. In 2020, the figure rose slightly to 278 million USD, followed by a sharp increase to 775 million USD in 2021, which represents a nearly threefold jump compared to the previous year. This sharp rise in 2021 might reflect changes in operational profitability, tax timing differences, or alterations in cash tax policy or payments.

Overall, while income tax provision levels remained relatively volatile with peaks in 2018 and 2021, cash operating taxes demonstrated a steady decline until 2019, a minor uptick in 2020, and a significant surge in 2021. The disparity between the trends in provision and cash taxes in recent years may indicate differences in accrued versus actual cash tax payments, suggesting the influence of tax deferrals, credits, or adjustments impacting cash flow differently from the provision expense.

The financial data reveals several significant trends in the company’s capital structure and financial positioning over the five-year period.

Total reported debt & leases

The reported debt and leases displayed an increasing trend from 2017 through 2019, rising sharply from $5,266 million in 2017 to $22,642 million in 2019. This substantial increase indicates a significant leveraging or financing activity during that period. In 2020 and 2021, the reported debt & leases figures stabilized somewhat, with slight decreases and then a modest increase ending at $21,974 million in 2021, suggesting a relatively stable level of debt in the most recent years considered.

Total shareholders’ equity

Shareholders’ equity experienced a decline from $2,731 million in 2017 to $2,293 million in 2018, followed by a dramatic increase to $32,979 million in 2019. This surge aligns with the observed rise in debt, which may reflect an equity issuance, revaluation, or comprehensive income increase that boosted equity considerably. Subsequently, shareholders’ equity declined slightly but remained high at $32,330 million in 2020 and then decreased further to $30,952 million in 2021. Despite these decreases, equity levels remain substantially higher than the initial 2017-2018 amounts.

Invested capital

Invested capital followed a trend similar to that of total debt and shareholders’ equity. Beginning at $9,201 million in 2017 and increasing modestly to $9,909 million in 2018, it then surged to $62,514 million by the end of 2019. This jump reflects the substantial changes in both debt and equity levels noted previously. Despite the surge, invested capital slightly decreased in 2020 and 2021, ending at $59,700 million in 2021, suggesting moderate adjustments or repayments affecting the overall invested capital base during these last two years.

In summary, the data illustrates a period of significant capital restructuring or acquisition activity around 2019, characterized by sharp increases in both debt and equity components. Following this peak, the company maintained relatively stable but high financial leverage and equity levels, with minor declines in invested capital and equity in recent years. This pattern may indicate strategic investments or financing followed by a phase of consolidation or optimization of the capital structure.

Economic Profit

The economic profit demonstrates a significant decline over the five-year period. Starting at 120 million US dollars in 2017, it increased to 181 million in 2018, indicating growth. However, from 2019 onwards, there is a marked negative shift, with economic profit plummeting to -5,056 million in 2019 and remaining negative through 2020 and 2021, although with some improvement in the deficit, reaching -4,682 million and -4,307 million respectively. This indicates the company experienced substantial losses in terms of economic profit beginning in 2019, which persisted but showed slight recovery through 2021.

Invested Capital

The invested capital shows a notable increase in 2019 compared to previous years. It rose moderately from 9,201 million in 2017 to 9,909 million in 2018, then surged sharply to 62,514 million in 2019. Following this spike, the invested capital slightly decreased in 2020 and 2021 to 60,165 million and 59,700 million respectively. This trend reflects a significant expansion in the capital base starting in 2019, followed by a slight consolidation in subsequent years.

Economic Spread Ratio

The economic spread ratio similarly mirrors the downturn observed in economic profit. The ratio grew from 1.3% in 2017 to 1.82% in 2018, representing an improving spread. However, it then plunged into negative territory in 2019, recording -8.09%, and although marginally improving in the following years to -7.78% in 2020 and -7.21% in 2021, it remained substantially negative. This indicates the company's returns on invested capital have fallen below its cost of capital significantly since 2019.

Revenue Trends

The adjusted revenue shows a continuous and significant growth over the analyzed period. Beginning at approximately US$5,765 million in 2017, revenue experienced a slight decline in 2018 to about US$5,662 million, followed by a sharp increase each subsequent year, reaching US$10,365 million in 2019, US$14,938 million in 2020, and finally US$16,303 million in 2021. This upward trajectory highlights substantial revenue expansion, particularly after 2018.

Economic Profit Trends

Economic profit depicted a favorable outcome during the initial two years, with US$120 million in 2017 and an increase to US$181 million in 2018. However, starting from 2019, economic profit sharply declined into negative territory, exhibiting significant losses of US$-5,056 million, US$-4,682 million, and US$-4,307 million in 2019, 2020, and 2021 respectively. Despite the losses, the negative economic profit appears to be gradually improving after the peak loss in 2019.

Economic Profit Margin Analysis

The economic profit margin followed a similar trend to economic profit, showing positive margins of 2.08% in 2017 and 3.19% in 2018, which then deteriorated significantly by 2019 to -48.78%. This sharp decline continued but showed slight improvement in the subsequent years, with margins of -31.34% in 2020 and -26.42% in 2021. The negative margins indicate the company did not cover its cost of capital during these years, though the margin gap somewhat narrowed after 2019.

Summary

Overall, the financial data reveals strong revenue growth post-2018, suggesting expanded sales or operational scale. Contrarily, economic profit and its margin indicate substantial losses from 2019 onward, which may derive from increased costs, investments, or structural changes impacting profitability despite rising revenue. The gradual improvement in negative economic profit figures and margins towards 2021 suggests efforts to mitigate losses, but profitability has not yet returned to positive levels.