Fidelity National Information Services (FIS +0.53%) stock plummeted to a 52-week low on Tuesday, dropping some 4% on the day to around $60.60 per share.
For a company that is one of the few dominant players in its primary business -- providing the technology to help banks move money -- such a drop might be considered a buying opportunity.
But Fidelity National has been trending lower for several years now, with a three-year average annualized return of negative 5% and a five-year average annualized return of negative 14%.
A lot of its problems stem from its acquisition of Worldpay in 2019 for about $43 billion, to expand into the merchant acquirer/payment processing businesses. Fidelity quickly realized it wasn't a fit and sold off about 55% of it to a private equity firm in 2023 for just $11.7 billion.
Image source: Getty Images.
The loss on that investment, among other factors, created net losses through 2023 and into 2024, and it only began to generate earnings again in the second quarter of 2024.
But it remained priced way too high for its sluggish earnings, and the valuation skyrocketed to a current price-to-earnings ratio of nearly 200, exacerbating the sell-off.
As we head into 2026, is Fidelity National stock a buy, or should investors stay away?
Some positive momentum for Fidelity National
Fidelity National heads into 2026 with some momentum. In the last quarter, earnings increased 8%, revenue climbed 6%, and (perhaps more importantly) its free cash flow surged 101% to about $800 million.
The lack of cash flow, or more specifically, investment dollars, has hurt Fidelity National in recent years, as it has not been able to invest as much in new technologies to hold off new competitors like Stripe, among others.
NYSE: FIS
Key Data Points
The other positive development is that it sold off the rest of its stake in Worldpay to Global Payments for around $24 billion. In exchange, it acquired Global Payments' issuer solutions business for around $13 billion, using some of the proceeds from the Worldpay sale.
With this move, expected to close this quarter, Fidelity National exits the merchant acquirer space, serving merchants, and bolsters its core business of serving banks, as issuer solutions provides credit processing technology for financial companies.
Has Fidelity finally turned the corner?
Fidelity raised its revenue guidance for fiscal 2025, calling for growth of 5.4% to 5.7% and reiterated its adjusted earnings-per-share growth forecast of 10% to 11%. It also increased its target for adjusted free-cash-flow conversion -- which gauges how it turns profits into cash -- to greater than 85%, up from 82% to 85%. This speaks to its increased efficiency.
The big question for investors is: Has Fidelity National finally turned the corner?
Based on its forward earnings projections, its P/E ratio plummets to about 10, which is downright cheap.
Most analysts consider it a buy, with a price target of $81 per share, suggesting 34% upside over the next 12 months.
I'm a bit more cautious. I think Fidelity National stock is a hold if you own it, because it seems to be trending in the right direction. But I'd wait for more visibility on the issuer solutions deal this month and fourth-quarter earnings on Feb. 10.
