Stock Analysis on Net

Fiserv Inc. (NASDAQ:FISV)

Economic Value Added (EVA)

Microsoft Excel LibreOffice Calc

Economic Profit

Fiserv Inc., economic profit calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net operating profit after taxes (NOPAT)1 1,728  1,565  1,322  1,176  1,079 
Cost of capital2 8.56% 8.52% 9.22% 9.16% 9.01%
Invested capital3 60,165  62,514  9,909  9,201  8,794 
 
Economic profit4 (3,422) (3,761) 408  333  287 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2020 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,7288.56% × 60,165 = -3,422

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Fiserv Inc. economic profit decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

Net Operating Profit after Taxes (NOPAT)

Fiserv Inc., NOPAT calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net income attributable to Fiserv, Inc. 958  893  1,187  1,246  930 
Deferred income tax expense (benefit)1 71  47  133  (247) 21 
Increase (decrease) in allowance for doubtful accounts2 21  — 
Increase (decrease) in contract liabilities3 86  178  (161) 69  10 
Increase (decrease) in employee termination costs4 13  14  —  —  — 
Increase (decrease) in equity equivalents5 179  260  (25) (178) 35 
Interest expense 716  507  193  176  163 
Interest expense, operating lease liability6 17  22  14  12  12 
Adjusted interest expense 733  529  207  188  175 
Tax benefit of interest expense7 (154) (111) (43) (66) (61)
Adjusted interest expense, after taxes8 579  418  163  122  114 
Interest income (7) (34) (4) (1) — 
Investment income, before taxes (7) (34) (4) (1) — 
Tax expense (benefit) of investment income9 —  — 
Investment income, after taxes10 (6) (27) (3) (1) — 
(Income) loss from discontinued operations, net of tax11 —  —  —  (14) — 
Net income (loss) attributable to noncontrolling interest 17  21  —  —  — 
Net operating profit after taxes (NOPAT) 1,728  1,565  1,322  1,176  1,079 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for doubtful accounts.

3 Addition of increase (decrease) in contract liabilities.

4 Addition of increase (decrease) in employee termination costs.

5 Addition of increase (decrease) in equity equivalents to net income attributable to Fiserv, Inc..

6 2020 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 596 × 2.90% = 17

7 2020 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 733 × 21.00% = 154

8 Addition of after taxes interest expense to net income attributable to Fiserv, Inc..

9 2020 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 7 × 21.00% = 1

10 Elimination of after taxes investment income.

11 Elimination of discontinued operations.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Fiserv Inc. NOPAT increased from 2018 to 2019 and from 2019 to 2020.

Cash Operating Taxes

Fiserv Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Income tax provision 196  198  378  158  492 
Less: Deferred income tax expense (benefit) 71  47  133  (247) 21 
Add: Tax savings from interest expense 154  111  43  66  61 
Less: Tax imposed on investment income —  — 
Cash operating taxes 278  255  288  471  532 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Fiserv Inc. cash operating taxes decreased from 2018 to 2019 but then increased from 2019 to 2020 not reaching 2018 level.

Invested Capital

Fiserv Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Short-term and current maturities of long-term debt 384  287  95 
Long-term debt, excluding current maturities 20,300  21,612  5,955  4,897  4,467 
Operating lease liability1 596  743  378  366  381 
Total reported debt & leases 21,280  22,642  6,337  5,266  4,943 
Total Fiserv, Inc. shareholders’ equity 32,330  32,979  2,293  2,731  2,541 
Net deferred tax (assets) liabilities2 4,361  4,135  725  529  736 
Allowance for doubtful accounts3 48  39  18  15  15 
Contract liabilities4 733  647  469  606  483 
Employee termination costs5 27  14  —  —  — 
Equity equivalents6 5,169  4,835  1,212  1,150  1,234 
Accumulated other comprehensive (income) loss, net of tax7 387  180  67  54  76 
Redeemable noncontrolling interests 259  262  —  —  — 
Noncontrolling interests 740  1,616  —  —  — 
Adjusted total Fiserv, Inc. shareholders’ equity 38,885  39,872  3,572  3,935  3,851 
Invested capital 60,165  62,514  9,909  9,201  8,794 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of contract liabilities.

5 Addition of employee termination costs.

6 Addition of equity equivalents to total Fiserv, Inc. shareholders’ equity.

7 Removal of accumulated other comprehensive income.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Fiserv Inc. invested capital increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.

Cost of Capital

Fiserv Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 77,236  77,236  ÷ 101,076  = 0.76 0.76 × 10.44% = 7.98%
Debt3 23,244  23,244  ÷ 101,076  = 0.23 0.23 × 3.14% × (1 – 21.00%) = 0.57%
Operating lease liability4 596  596  ÷ 101,076  = 0.01 0.01 × 2.90% × (1 – 21.00%) = 0.01%
Total: 101,076  1.00 8.56%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 73,709  73,709  ÷ 97,436  = 0.76 0.76 × 10.44% = 7.90%
Debt3 22,984  22,984  ÷ 97,436  = 0.24 0.24 × 3.25% × (1 – 21.00%) = 0.61%
Operating lease liability4 743  743  ÷ 97,436  = 0.01 0.01 × 3.00% × (1 – 21.00%) = 0.02%
Total: 97,436  1.00 8.52%

Based on: 10-K (reporting date: 2019-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 33,187  33,187  ÷ 39,574  = 0.84 0.84 × 10.44% = 8.75%
Debt3 6,009  6,009  ÷ 39,574  = 0.15 0.15 × 3.69% × (1 – 21.00%) = 0.44%
Operating lease liability4 378  378  ÷ 39,574  = 0.01 0.01 × 3.69% × (1 – 21.00%) = 0.03%
Total: 39,574  1.00 9.22%

Based on: 10-K (reporting date: 2018-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 29,363  29,363  ÷ 34,738  = 0.85 0.85 × 10.44% = 8.82%
Debt3 5,009  5,009  ÷ 34,738  = 0.14 0.14 × 3.36% × (1 – 35.00%) = 0.31%
Operating lease liability4 366  366  ÷ 34,738  = 0.01 0.01 × 3.36% × (1 – 35.00%) = 0.02%
Total: 34,738  1.00 9.16%

Based on: 10-K (reporting date: 2017-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 24,653  24,653  ÷ 29,742  = 0.83 0.83 × 10.44% = 8.65%
Debt3 4,707  4,707  ÷ 29,742  = 0.16 0.16 × 3.20% × (1 – 35.00%) = 0.33%
Operating lease liability4 381  381  ÷ 29,742  = 0.01 0.01 × 3.20% × (1 – 35.00%) = 0.03%
Total: 29,742  1.00 9.01%

Based on: 10-K (reporting date: 2016-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Fiserv Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Economic profit1 (3,422) (3,761) 408  333  287 
Invested capital2 60,165  62,514  9,909  9,201  8,794 
Performance Ratio
Economic spread ratio3 -5.69% -6.02% 4.12% 3.62% 3.26%
Benchmarks
Economic Spread Ratio, Competitors4
Accenture PLC 13.90% 12.60% 12.83% 9.71% 22.01%
Adobe Inc. 10.60% 8.68% 6.28% 10.99% 10.09%
Autodesk Inc. 5.94% -15.05% -27.04% -24.94% -6.55%
Automatic Data Processing Inc. 17.74% 15.72% 13.89% 15.17% 10.96%
Fidelity National Information Services Inc. -7.63% -7.53% -4.26% -5.40% -4.55%
International Business Machines Corp. -5.49% -1.72% -1.89% -4.63% -0.48%
Intuit Inc. 9.63% 23.40% 21.08% 25.68% 23.88%
Mastercard Inc. 22.31% 43.46% 38.37% 29.27% 27.47%
Microsoft Corp. 34.54% 29.39% 10.54% 25.52% 42.98%
Oracle Corp. 3.98% 7.01% -2.06% 4.88% 7.62%
PayPal Holdings Inc. 2.52% -2.74% -2.24% -10.02% -4.01%
salesforce.com inc. -7.61% -3.60% -3.12% -4.61% -3.38%
ServiceNow Inc. 9.13% 8.52% 4.49% 4.86% -21.98%
Visa Inc. 7.83% 13.52% 8.39% 6.45% 1.08%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2020 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -3,422 ÷ 60,165 = -5.69%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Fiserv Inc. economic spread ratio deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.

Economic Profit Margin

Fiserv Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Economic profit1 (3,422) (3,761) 408  333  287 
 
Revenue 14,852  10,187  5,823  5,696  5,505 
Add: Increase (decrease) in contract liabilities 86  178  (161) 69  10 
Adjusted revenue 14,938  10,365  5,662  5,765  5,515 
Performance Ratio
Economic profit margin2 -22.91% -36.28% 7.21% 5.77% 5.20%
Benchmarks
Economic Profit Margin, Competitors3
Accenture PLC 7.07% 5.82% 5.39% 4.17% 8.72%
Adobe Inc. 15.21% 13.05% 10.28% 14.33% 13.09%
Autodesk Inc. 7.84% -24.53% -39.36% -37.19% -8.26%
Automatic Data Processing Inc. 11.68% 10.54% 7.61% 9.20% 7.43%
Fidelity National Information Services Inc. -45.34% -54.62% -11.33% -13.37% -11.82%
International Business Machines Corp. -9.54% -2.93% -2.66% -6.30% -0.64%
Intuit Inc. 10.84% 15.59% 14.01% 14.27% 13.50%
Mastercard Inc. 28.66% 37.71% 28.72% 22.68% 25.94%
Microsoft Corp. 25.03% 21.27% 7.34% 20.14% 22.51%
Oracle Corp. 9.07% 12.76% -3.73% 10.02% 13.21%
PayPal Holdings Inc. 3.55% -3.43% -2.58% -13.44% -6.07%
salesforce.com inc. -18.74% -7.08% -5.00% -8.28% -5.08%
ServiceNow Inc. 7.46% 6.26% 3.79% 3.92% -16.51%
Visa Inc. 22.05% 29.99% 19.38% 17.94% 3.37%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 Economic profit. See details »

2 2020 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × -3,422 ÷ 14,938 = -22.91%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Fiserv Inc. economic profit margin deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.