Overlooked and Undervalued: Why Fiserv Deserves Attention

Payment processing giant Fiserv (NASDAQ: FISV) continues to disappoint investors, and after falling for most of 2025, it lost nearly half of its value in one day last October. It has remained down since then and has become ridiculously cheap, trading at a P/E ratio of only 10.

Let's check out what's happening at Fiserv and why it might deserve investor attention at this price.

Image source: Getty Images.

A leader in global payments

Fiserv is one of the largest payment processing companies in the world. It provides the back-end infrastructure for many banks and other financial institutions, taking a behind-the-scenes approach to bigger names you know and engage with.

It has more than $21 billion in trailing-12-month revenue, and it typically boasts healthy growth. However, it has made a few missteps recently. Its third-quarter report came in below expectations, and management cut full-year guidance.

The misses were pretty severe -- earnings per share (EPS) were $2.04, a full $0.60 lower than Wall Street expectations, and sales declined 1% to $4.92 billion, missing expectations of $5.36 billion.

Management is guiding for full-year EPS of $8.55 at the midpoint, down from previous guidance of $10.15 to $10.30, and revenue is forecasted to increase 3.5% to 4% instead of the prior guidance of 10%.

On top of that, it's also dealing with a lawsuit from shareholders who say the company made misleading claims about Clover, a payment platform it acquired and is expanding. They allege that Fiserv inflated comparable sales growth by switching clients from other platforms.

Value trap or buying opportunity?

These are serious problems, and compounded, it's not surprising that Fiserv stock has plummeted. However, these are near-term developments that may end up being short-term. Fiserv is the leader in its industry, and it has a robust software-as-a-service (SaaS) model that relies heavily on recurring revenue. It serves thousands of clients and works with millions of merchants, and it's also highly profitable. That's why this may be an opportunity instead of a value trap.

CEO Mike Lyons, who only recently started on the job, has created the One Fiserv Action Plan, which involves a long-term approach to client service and operational excellence. It's also planning to implement greater use of artificial intelligence (AI) to improve its platform, and it just announced an enhanced deal with automated workflow company ServiceNow (NYSE: NOW) as part of the plan.

It will take time for the company to regain the trust of investors and for the stock to go back to its previous high, but investors may want to give it a second look at the current price.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy.