Fiserv to Buy Back 5.6% of Its Stock

Sloppy day today. The cyclicals were particularly weak. The Consumer Index (^CMR) actually closed slightly higher, and our Buy List beat the S&P 500 for the second day in a row. The metals got punished today, which I like to see.
Home Depot (HD) announced today that it’s increasing its share buyback program by $1 billion. As I’ve mentioned before, I not a big fan of share repurchases. I’d rather just get a dividend.
Fiserv (FISV) said that it will repurchase up to 10 million shares. Considering the size of the company ($8 billion market cap), that’s huge. It works out to 5.6% of the company’s stock.
What I find so interesting about Fiserv is the way the stock’s P/E ratio has collapsed in recent years. It’s always tricky predicting where a stock’s P/E ratio ought to be, but let’s look at the facts. Fiserv’s earnings multiple has been dropping like a stone, and it’s lower now than it was during much of the 1990’s (see below). Also, Fiserv’s earnings have increased pretty consistently for the past few years.

Posted by Eddy Elfenbein on February 23rd, 2006 at 5:47 pm

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