Insider Decision: Guy Chiarello Exercises Options At Fiserv For $6.67M

A significant insider transaction involving the exercise of company stock options was reported on December 13, by Guy Chiarello, Chief Operating Officer at Fiserv FI, as per the latest SEC filing.

What Happened: A Form 4 filing with the U.S. Securities and Exchange Commission on Wednesday revealed that Chiarello, Chief Operating Officer at Fiserv in the Financials sector, exercised stock options for 80,000 shares of FI stock. The exercise price of the options was $52.81 per share.

Fiserv shares are currently trading up by 0.69%, with a current price of $136.15 as of Thursday morning. This brings the total value of Chiarello's 80,000 shares to $6,667,200.

Unveiling the Story Behind Fiserv

Fiserv is a leading provider of core processing and complementary services, such as electronic funds transfer, payment processing, and loan processing, for U.S. banks and credit unions, with a focus on small and midsize banks. Through the merger with First Data in 2019, Fiserv also provides payment processing services for merchants. About 10% of the company's revenue is generated internationally.

Breaking Down Fiserv's Financial Performance

Revenue Growth: Fiserv's revenue growth over a period of 3 months has been noteworthy. As of 30 September, 2023, the company achieved a revenue growth rate of approximately 7.86%. This indicates a substantial increase in the company's top-line earnings. In comparison to its industry peers, the company trails behind with a growth rate lower than the average among peers in the Financials sector.

Profitability Metrics: Unlocking Value

• Gross Margin: The company excels with a remarkable gross margin of 61.13%, indicating superior cost efficiency and profitability compared to its industry peers.

• Earnings per Share (EPS): Fiserv's EPS is significantly higher than the industry average. The company demonstrates a robust bottom-line performance with a current EPS of 1.57.

Debt Management: Fiserv's debt-to-equity ratio is below the industry average. With a ratio of 0.79, the company relies less on debt financing, maintaining a healthier balance between debt and equity, which can be viewed positively by investors.

Financial Valuation Breakdown:

• Price to Earnings (P/E) Ratio: The P/E ratio of 28.35 is lower than the industry average, implying a discounted valuation for Fiserv's stock.

• Price to Sales (P/S) Ratio: The current P/S ratio of 4.49 is below industry norms, suggesting potential undervaluation and presenting an investment opportunity for those considering sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): Fiserv's EV/EBITDA ratio, lower than industry averages at 13.3, indicates attractively priced shares.

Market Capitalization Analysis: Above industry benchmarks, the company's market capitalization emphasizes a noteworthy size, indicative of a strong market presence.

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Why Insider Transactions Are Key in Investment Decisions

It's important to note that insider transactions alone should not dictate investment decisions, but they can provide valuable insights.

Within the legal framework, an "insider" is defined as any officer, director, or beneficial owner holding more than ten percent of a company's equity securities as per Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and major hedge funds. These insiders are mandated to disclose their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

The initiation of a new purchase by a company insider serves as a strong indication that they expect the stock to rise.

However, insider sells may not always signal a bearish view and can be influenced by various factors.

Breaking Down the Significance of Transaction Codes

Taking a closer look at transactions, investors often prioritize those unfolding in the open market, meticulously cataloged in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C denotes the conversion of an option, and transaction code A signifies a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Fiserv's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.