Fiserv Inc. (NASDAQ:FISV)

Return on Assets (ROA)

The return on assets demonstrated a notable declining trend from March 2018 through December 2019, dropping from 13.99% to just above 1%. This steep decrease reflects a significant reduction in asset profitability during this period. Starting in 2020, ROA stabilized at relatively low single-digit values, fluctuating between 1.09% and 1.75% through the end of 2021. A modest recovery is observed in early 2022, with ROA rising to 2.25%, indicating a gradual improvement in asset efficiency.

Financial Leverage

Financial leverage exhibited substantial volatility over the analyzed timeframe. Initially, leverage increased from 3.42 to a peak of 7.71 ratio in mid-2019, signaling a significant rise in debt relative to equity or assets. However, this peak was followed by a sharp correction to around 2.35 ratio by the end of 2019. From 2020 through the first quarter of 2022, the financial leverage ratio remained relatively stable, fluctuating narrowly between 2.28 and 2.46. This stability suggests a more conservative capital structure in recent periods.

Return on Equity (ROE)

Return on equity mirrored the trend observed in ROA but with more pronounced fluctuations. ROE peaked in September 2018 at 54.38%, before experiencing a drastic decline to under 3% by the end of 2019. Through 2020 and 2021, the ROE remained at subdued levels, generally below 4%, reflecting diminished profitability for shareholders. Beginning in the latter part of 2021 and into early 2022, a gradual increase to 5.43% was recorded, indicating the start of a recovery in equity returns.

Summary Insights

Overall, the data reveals a marked deterioration in profitability metrics (ROA and ROE) from 2018 to the end of 2019, accompanied by a spike and then normalization in financial leverage. Post-2019, the financial position appears more stable with conservative leverage levels and modest but steady improvements in profitability. The trends suggest that the entity underwent a challenging period with reduced earnings efficiency and profitability, followed by measured recovery and stabilization in the subsequent quarters.

Net Profit Margin

The net profit margin exhibited a declining trend from early 2018 through late 2019, falling from approximately 25% to below 9%. The decline was sharpest between the first quarter of 2018 and the end of 2019, with a drop from 24.76% to 8.77%. Starting in 2020, the margin stabilized at lower levels, fluctuating between approximately 5.8% and 8.2%, and showed signs of gradual improvement in early 2022, reaching 10.23%.

Asset Turnover

Asset turnover demonstrated a general downward trend from 0.56 in March 2018 to 0.13 by December 2019, indicating a decrease in efficiency in generating revenue per unit of assets. From 2020 onward, asset turnover has recovered slightly but remained relatively low and stable around 0.2 to 0.22, suggesting some improvement in asset utilization but still below the levels observed in 2018.

Financial Leverage

Financial leverage showed increased variability over the observed period. It rose from 3.42 in March 2018 to a higher peak of 7.71 by mid-2019, indicating increased use of debt or liabilities relative to equity. Subsequently, leverage declined sharply to about 2.3 in late 2019 and remained relatively stable around this level through early 2022. This suggests a reduction in leverage after mid-2019 and a period of moderate and consistent financial structure.

Return on Equity (ROE)

Return on equity was strong and growing initially, peaking at over 54% in late 2018, consistent with earlier high net profit margins. However, ROE declined steeply in 2019, dropping to a very low level around 2.7% by the fourth quarter of that year. Throughout 2020 and 2021, ROE remained subdued but showed a slow upward trend, rising to 5.43% by the first quarter of 2022. The decline in ROE aligns with diminished profitability and asset turnover efficiency during this period.

Summary of Trends

Overall, the company experienced a notable erosion in profitability and efficiency metrics from 2018 to 2019, reflected in declining net profit margin, asset turnover, and ROE. Financial leverage increased significantly through mid-2019 before decreasing and stabilizing at lower levels, possibly indicating a deleveraging strategy in response to operational challenges.

From 2020 onwards, while profitability and ROE metrics were substantially lower than earlier peaks, they exhibited modest recovery signals. Asset turnover stabilized at lower values, and net profit margin showed incremental improvement. This pattern suggests a period of adjustment and gradual operational recovery following a phase of significant financial stress or restructuring during 2019.

The analysis of the quarterly financial indicators reveals several notable trends over the observed periods.

Net Profit Margin (%)

The net profit margin demonstrated a declining trend from early 2018 through 2019, decreasing from approximately 25% to below 9% by the end of 2019. This decline continued into 2020, reaching a low near 5.8% mid-year, indicative of reduced profitability during this period. However, from late 2020 onward, a gradual recovery is evident, with margins climbing steadily to exceed 10% by the first quarter of 2022. This suggests improved operational efficiency or favorable market conditions contributing to enhanced profitability in recent quarters.

Asset Turnover (ratio)

Asset turnover showed a moderate decline from 0.56 in early 2018 down to a pronounced low of approximately 0.1 by the third quarter of 2019, signaling reduced efficiency in generating revenue from assets. Post this trough, there was a slight recovery to stable levels around 0.2 to 0.22 in the 2020-2022 timeframe. Despite this modest improvement, turnover ratios remained significantly below earlier levels, which may indicate persistent challenges in asset utilization or strategic shifts in asset base management.

Return on Assets (ROA) (%)

Return on assets followed a similar downward trajectory as the net profit margin and asset turnover, declining from around 14% in early 2018 to nearly 1% by late 2019 and through 2020. This sharp decrease highlights a diminished capacity to generate profit from company assets during this period. Starting in late 2020, ROA exhibited a slow upward trend, reaching approximately 2.25% by the first quarter of 2022, reflecting gradual improvement in asset profitability aligned with the recovery in profit margins.

In summary, the company experienced a marked decline in profitability and efficiency measures from 2018 through 2019 and into 2020, followed by a gradual recovery trend in profit margins and return on assets starting in late 2020. Asset turnover improved marginally but remained well below historical levels, possibly signaling ongoing structural adjustments or strategic changes in asset deployment. The overall financial performance indicates a period of challenge with signs of stabilization and recovery emerging in the most recent quarters.