Shares of Fiserv, Inc. FISV have gained 22.1% in the past year, outperforming the S&P 500’s gain of 14%. The company’s key growth drivers include its strong market position, a healthy product portfolio, significant acquisition synergies and steady flow of new customers.

Fiserv reported mixed results in first-quarter 2018, wherein bottom line surpassed the Zacks Consensus Estimate but the top line missed the same. Adjusted earnings of 76 cents outpaced the consensus mark by 3 cents and improved 22.6% year over year. Total revenues came in at $1.440 million, which missed the consensus mark of $1,442.1 million but increased 3.3% year over year.

The company’s earnings surprise history has been decent. Fiserv surpassed estimates in two of the trailing four quarters, with an average beat of 0.4%. For the second quarter, the consensus estimate has remained unchanged over the past 30 days.

Market Position & Operational Efficiency to Drive Growth

Fiserv’s dominant position in the financial and payments solutions business is expected to continue driving growth. Furthermore, the company’s broad and diverse customer base, efforts to enhance operational efficiency, high recurring revenues and continued technology upgrades are encouraging.

In first-quarter 2018, which is the third year of Fiserv’s ongoing five-year operational effectiveness program, the company achieved $18 million of savings. The savings came on the back of solid labor optimization and procurement benefits. Fiserv is optimistic about achieving its target of $50 million savings by 2018.

Fiserv, Inc. Revenue (TTM)

Fiserv, Inc. Revenue (TTM) | Fiserv, Inc. Quote

Acquisitions a Key Catalyst

Fiserv continues to expand its product portfolio and enhance its offerings with the help of strategic acquisitions.The company completed four acquisitions — Online Banking Solutions, Inc., PCLender, LLC, Dovetail Group Limited and Monitise plc — in 2017. These buyouts helped the company to improve cash management and digital business banking solutions, and transform payments infrastructure.

We believe Fiserv will continue to pursue accretive deals, which will boost its market share and customer base moving ahead. It is focused into becoming a global leader in transaction-based technology solutions.

Competition Rife

Fiserv’s core banking products and services are part of a highly competitive market. Several non-banking bodies such as internal data processing departments, data processing affiliates of large companies, large computer hardware manufacturers, independent computer service firms, and processing centers — that are offering both customer facing and back office financial technology products and services — are teeming in the space.

Going ahead, competition is anticipated to increase as market entrants multiply in number and the existing ones expand their product lines and services with updated technologies to attract new customers and retain the existing ones. Maintaining strong and long-term client relationships is a difficult task, amid stiff competition.

Zacks Rank & Key Picks

Currently, Fiserv has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Business Services sector include The Dun & Bradstreet Corp. DNB, TransUnion TRU and FLEETCOR Technologies, Inc. FLT. While Dun & Bradstreet sports a Zacks Rank #1 (Strong Buy), TransUnion and FLEETCOR carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for Dun & Bradstreet, TransUnion and FLEETCOR Technologies is 4.5%, 10% and 16.5%, respectively.