Fiserv Inc. (NASDAQ:FISV)

The analysis of the quarterly financial data reveals distinct trends in return metrics and financial leverage over the period from early 2017 through the first quarter of 2022.

Return on Assets (ROA)

ROA was not reported for the initial quarters of 2017 but shows a notable level of 12.11% by the end of the first quarter of 2017. Subsequently, it experienced an upward trend peaking around 14.21% in the third quarter of 2017 before gradually declining to approximately 1.2% by the fourth quarter of 2019. Following this decline, ROA stabilized around a low range between 1.09% and 1.75% through 2021, with a marked improvement to 2.25% in the first quarter of 2022. Overall, ROA exhibited a pronounced decline from high double-digit values to a steadier and lower single-digit range toward the end of the period.

Financial Leverage

Financial leverage remained relatively stable around 4.0 times in the early quarters but demonstrated considerable volatility thereafter. It peaked at 7.71 times in the second quarter of 2019 before sharply declining below 2.5 times by the end of 2019 and maintaining an approximate steady level between 2.28 and 2.46 times throughout 2020 to early 2022. The reduced and more consistent financial leverage post-2019 may reflect strategic action to deleverage the balance sheet or changing capital structure dynamics in response to evolving market or operational conditions.

Return on Equity (ROE)

ROE data, absent for the first three quarters of 2017, begins at a high 45.62% at the end of the first quarter of 2017 and trends upward to a peak above 54% in the fourth quarter of 2017. Subsequently, ROE declines sharply to a mere 2.85% by the fourth quarter of 2019, paralleling the trend in ROA but more pronounced in its magnitude of change. Post-2019, ROE remains at low single-digit values with slight fluctuations, rising modestly to 5.43% by the first quarter of 2022. The sharp drop in ROE aligns with decreasing financial leverage and ROA, signaling potential shifts in profitability and capital effectiveness.

In summary, the financial performance as measured by ROA and ROE has transitioned from very high levels with significant volatility toward stabilized but comparatively lower returns accompanied by a substantial reduction and stabilization in financial leverage. This pattern suggests a phase of deleveraging and potentially more conservative financial management, with ongoing challenges in restoring higher profitability ratios during the recent periods analyzed.

The analysis of financial ratios over the series of quarterly periods reveals several distinct trends and shifts in performance metrics.

Net Profit Margin

Beginning from the first available data point in March 2017, the net profit margin was 21.88%, experiencing a steady increase through 2017 into early 2018, peaking around 25.14%. Following the peak, there is a noticeable decline throughout 2019 and into 2020, reaching a low point near 5.82% in Q3 2020. From that trough, a gradual recovery trend emerges, with margins rising modestly and ending at 10.23% in March 2022. This suggests an initial strong profitability phase, followed by a period of margin compression, possibly due to cost pressures or market conditions, and a partial recovery thereafter.

Asset Turnover

The asset turnover ratio starts at 0.55 in early 2017, showing slight fluctuations but generally trending downward over the subsequent quarters. There is a pronounced drop from mid-2019 onwards, bottoming near 0.1, indicating a period where assets were less effectively utilized to generate revenue. Following this low, a mild improvement trend is visible, with ratios stabilizing around 0.2 to 0.22 by early 2022. The low asset turnover levels could reflect investments in assets not yet fully leveraged or a slowdown in sales relative to asset growth.

Financial Leverage

Financial leverage begins at a relatively high level around 4.0 in early 2017, fluctuating throughout the following years. It peaks strongly at 7.71 in mid-2019, representing an increased use of debt relative to equity. Thereafter, a significant reduction occurs, with leverage stabilizing between 2.2 and 2.5 from late 2019 onwards. This reduction indicates a strategic deleveraging or an increase in equity base relative to debt, suggestive of a more conservative capital structure or balance sheet strengthening after mid-2019.

Return on Equity (ROE)

The ROE shows an initial upward trajectory through 2017 and early 2018, reaching a peak above 54% at the end of 2017. However, from 2018 onward, there is a marked decline, with ROE dropping sharply to under 3% by late 2019 and continuing at very low levels through 2020 and early 2021. Some improvement is apparent starting mid-2021, with ROE climbing to 5.43% by March 2022. This substantial decline and gradual recovery could be associated with the earlier observed trends in profitability, asset utilization, and financial leverage, reflecting the company’s changes in operational efficiency, capital management, and market conditions.

The analyzed financial metrics exhibit distinct trends over the observed quarters, highlighting shifts in profitability, efficiency, and asset utilization.

Net Profit Margin (%)

The net profit margin demonstrates a peak in the 2017-2018 period, reaching its highest values around 25% in late 2017. After this peak, a noticeable declining trend occurs throughout 2018 and 2019, reaching lows near 5.82% in the third quarter of 2020. Subsequently, the margin shows a mild recovery, gradually increasing through 2021 and early 2022, ending above 10%. This suggests a phase of reduced profitability followed by a gradual improvement in profit control or operational factors.

Asset Turnover (ratio)

Asset turnover remains relatively stable but low compared with the initial values presented for 2017-2018, where ratios were around 0.54 to 0.57. Starting in 2019, there is a marked decline to as low as 0.1, indicating decreased efficiency in generating revenue from assets during that period. From 2020 onwards, the ratio experiences a modest recovery, stabilizing slightly above 0.2 by early 2022, suggesting slight improvements in asset utilization efficiency but still below earlier peak levels.

Return on Assets (ROA) (%)

The ROA follows a pattern similar to the net profit margin, initially strong with values around 13-14% in early 2018 but falling sharply through 2019 to as low as approximately 1% in late 2019 and early 2020. The subsequent periods reveal slight fluctuations but generally maintain a low ROA between 1% and 2.25%, showing a subdued return on asset investments despite a gradual recovery trend after the 2020 trough.

Overall, the data indicates a period of robust profitability and asset efficiency in 2017 and 2018, followed by a significant decline in profit margins, asset turnover, and ROA starting in 2019. The downturn stabilizes in 2020, with early signs of recovery visible in profitability and asset returns by 2022, although asset turnover remains below previous peak levels. These trends could reflect underlying changes in operational effectiveness, market conditions, or strategic adjustments during the observed timeframe.