Corporate executives and directors tend to have the most up-to-date information on their companies. If these insiders are buying stock, it’s generally a positive development.
Here, we are going to highlight an insider transaction at Fiserv Inc (FISV:US). Fiserv is an American company that provides payment processing and financial services to banks, financial institutions, merchants, and corporate clients. As well as providing point of sale technology, it also enables mobile phone payments and various other payment processing services. It’s traded on the Nasdaq Stock Exchange and currently has a market capitalization of $73.9 billion.
Fiserv Inc: Insider Buying
Regulatory filings show that on 11 August, a Director at Fiserv, Denis O’Leary, purchased 12,500 FISV shares at a price of $111.28 per share. This purchase cost the insider approximately $1.4 million and increased his holding by around 16%.
This trade stands out for a couple of reasons. Firstly, it is a large trade in monetary terms which suggests that the insider is very confident that the stock price will move in an upward direction.
Secondly, we covered Fiserv earlier in the year after the same Director bought stock back in the middle of February. The share price moved up 10% within a month of his purchase of Fiserv stock which suggests that he has a good read on the stock.
Fiserv recently produced a very impressive set of Q2 figures.
GAAP revenue increased 17% for the quarter to $4.05 billion while GAAP EPS moved up to $0.40 from $0.00 in the second quarter of 2020. The GAAP operating margin in Q2 of 15.9% was a significant improvement on the 4.7% figure achieved in Q2 2020. Free cash flow was up by 4% to $1.72 billion compared to the same period last year. The company raised revenue and EPS guidance for the full year due to the momentum it saw during the quarter.
"Given our strong financial results in the first half of the year, coupled with our continued business execution, we are again raising our internal revenue growth outlook as well as our overall adjusted EPS outlook. Our agility, speed of implementation and new product launches should continue to accelerate our growth," said Frank Bisignano, President and CEO of Fiserv.
Given the positive outlook statement, we see the recent insider trading at Fiserv as bullish. It would suggest that the Director strongly believes that the company stock is undervalued.