Intrinsic Value Intercorp Financial Services Inc. (IFS)

• Previous Close: $48.98
• Intrinsic Value: $27.29
• Upside potential: -44%

Stock Valuation Context

Business Model And Market Position

Intercorp Financial Services Inc. (IFS) operates as a diversified financial services provider in Peru, offering banking, insurance, wealth management, and other financial solutions. The company generates revenue primarily through interest income from loans, fees from financial services, and premiums from insurance products. IFS holds a strong market position, leveraging its affiliation with Intercorp Group to cross-sell services and maintain a broad customer base across retail, corporate, and institutional segments. The Peruvian financial sector remains competitive, but IFS differentiates itself through integrated solutions, digital innovation, and a focus on underserved markets. Its multi-brand strategy allows targeted offerings, enhancing customer retention and market penetration. With a robust distribution network and a reputation for reliability, IFS is well-positioned to capitalize on Peru’s growing financial inclusion trends and economic development.

Revenue Profitability And Efficiency

In FY 2024, IFS reported revenue of $4.49 billion and net income of $1.30 billion, reflecting a net margin of approximately 29%. Diluted EPS stood at $11.38, demonstrating strong profitability. However, operating cash flow was negative at -$1.78 billion, likely due to significant working capital adjustments or investment activities. Capital expenditures were modest at -$104.7 million, indicating disciplined spending relative to revenue scale.

Earnings Power And Capital Efficiency

IFS exhibits robust earnings power, with net income representing a substantial portion of revenue. The company’s ability to generate high margins suggests efficient cost management and pricing power. The negative operating cash flow warrants further scrutiny but may reflect timing differences or strategic investments. Capital efficiency appears solid, given the relatively low capex intensity compared to earnings.

Balance Sheet And Financial Health

IFS maintains a strong balance sheet, with cash and equivalents of $12.20 billion against total debt of $11.82 billion, indicating a healthy liquidity position. The near-parity between cash and debt suggests manageable leverage, though the composition of debt (short vs. long-term) would provide additional clarity. Shareholders’ equity appears resilient, supporting further growth or dividend commitments.

Growth Trends And Dividend Policy

The company’s revenue and net income growth trends are not explicitly provided, but the dividend per share of $1.00 signals a commitment to shareholder returns. Given the high profitability, IFS likely retains sufficient earnings to reinvest while maintaining dividends. Future growth may hinge on expanding financial inclusion in Peru or diversifying revenue streams.

Valuation And Market Expectations

With a diluted EPS of $11.38, IFS trades at a P/E ratio that would depend on its current market price. Investors likely value the company’s strong profitability and market position, though the negative operating cash flow may raise questions. Market expectations probably balance growth potential in Peru’s financial sector against macroeconomic risks.

Strategic Advantages And Outlook

IFS benefits from its integrated financial ecosystem, brand strength, and digital capabilities, which enhance customer stickiness. The outlook remains positive, driven by Peru’s economic recovery and increasing demand for financial services. However, regulatory changes or economic volatility could pose risks. Strategic investments in technology and expansion into underserved segments could further solidify its market leadership.

Sources

Company filings (CIK: 0001615903), FY 2024 financial data