Following the fourth-quarter earnings report from Fidelity National Information Services (FIS), the stock dropped about 8% in trading today. I believe the decline is an overreaction to a solid earnings report and strong forecast for 2022.

The company earned $1.92 a share in the quarter versus $1.62 in the prior year, and that was $0.02 better than expectations. Sales grew across all the company’s businesses, led by a 19% gain in merchant solutions. Sales were up 11% overall and 10% on organic basis. However, fourth-quarter sales of $3.76 million were $30 million short of expectations, and the sales miss is partly what hit the stock today. I think there was some disappointment that Banking Solutions only had a 7% organic revenue gain, as this is the segment that many believed could be under pressure from Buy Now Pay Later competition.

For the first quarter, Fidelity National Information Services expects revenue of $3.42 billion to $3.45 billion and EPS of $1.44 to $1.47. The forecasts were below expectations for revenue of $3.49 billion and EPS of $1.56, as management indicated on the conference call that Omicron led to a slow start to January. However, annual revenue guidance of $14.78 billion to $14.92 billion and annual EPS guidance of $7.25 vs. $7.37 were in line with expectations.

While growth may have been disappointing at the margin, I think it is important to remember that at less than 15X this year’s EPS estimates, you are not paying for much growth even though FIS continues to advance sales and earnings at a nice pace. I will let you know if there was another reason for the decline in the stock, but for now I continue to recommend FIS. Buy FIS below $125. My target is $140.