Broadridge (BR) Rides on Recurring Revenues, Debt Woes Persist

·3-min read

Broadridge Financial Solutions, Inc. BR is currently benefiting from strategic acquisitions and a strong business model.

The company recently reported third-quarter fiscal 2022 adjusted earnings of $1.93 per share that surpassed the Zacks Consensus Estimate by 9% and increased 9.7% on a year-over-year basis. Total revenues of $1.5 billion missed the consensus mark by a slight margin but were up 10.4% year over year.

How is Broadridge Doing?

Broadridge’s robust business model ensures significant recurring-fee revenues, including contributions from net new business and acquisition-related synergies. In the third quarter of fiscal 2022, recurring-fee revenues of $1 billion increased 16% year over year.

Broadridge Financial Solutions, Inc. Revenue (TTM)

Broadridge Financial Solutions, Inc. Revenue (TTM)
Broadridge Financial Solutions, Inc. Revenue (TTM)

Broadridge Financial Solutions, Inc. revenue-ttm | Broadridge Financial Solutions, Inc. Quote

Broadridge has been supplementing internal growth with strategic acquisitions. The company has consolidated Alpha Omega, which it had acquired in 2021, to its NYFIX connectivity and FIX infrastructure for better automation of buy-side and sell-side firms’ trade matching processes. Another acquisition, Advisor Stream, boosts the company’s front-to-back office wealth capabilities, positioning it to better assist firms that aim to tap into and serve clients across digital channels.

The company has a track record of consistent dividend payments. During fiscal 2021, the company paid cash dividends of $261.7 million. It paid out $241 million and $211.2 million of dividends during fiscal 2020 and 2019, respectively.

Broadridge's current ratio at the end of fiscal third quarter was pegged at 1.27, lower than the current ratio of 1.38 reported at the end of the prior-year quarter. Decreasing current ratio is not desirable as it indicates that the company may have problems meeting its short-term obligations.

Broadridge has more long-term debt outstanding than cash. Cash and cash equivalents balance of $277 million at the end of the fiscal third quarter was well below its long-term debt of $4.2 billion.

The stock declined 13.5% over the past year against 6.1% growth of the industry it belongs to.

Broadridge Financial Solutions, Inc. Price

Broadridge Financial Solutions, Inc. Price
Broadridge Financial Solutions, Inc. Price

Broadridge Financial Solutions, Inc. price | Broadridge Financial Solutions, Inc. Quote

Zacks Rank and Stocks to Consider

Broadridge currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks the broader Business Services sector that investors can consider are Cross Country Healthcare CCRN, Gartner IT and Clean Harbors CLH.

Cross Country Healthcare and Gartner sport a Zacks Rank #1 (Strong Buy) while Clean Harbors carries a Zack Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cross Country Healthcare has an expected earnings growth rate of 49.4% for the current year. It has a trailing four-quarter earnings surprise of 29.2%, on average. CCRN has a long-term earnings growth rate of 6.9%. Shares have surged 3% in the past year.

Gartner’s shares have surged 12.4% in the past year. The company delivered a trailing four-quarter earnings surprise of 24.2%, on average.

The Zacks Consensus Estimate for IT’s earnings in the current year has moved up 9.5% in the past 30 days.

Clean Harbors has an expected earnings growth rate of 26.1% for the current year. The company has a trailing four-quarter earnings surprise of 35.8%, on average.

The Zacks Consensus Estimate for CLH’s earnings in the current year has moved up 7.7% in the past 30 days.


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