A month has gone by since the last earnings report for Broadridge Financial Solutions (BR - Free Report) . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Broadridge Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Broadridge Surpasses Q4 Earnings and Revenues Estimates
Broadridge Financial Solutions reported strong fourth-quarter fiscal 2020 results beating the Zacks Consensus Estimate on both counts.
Adjusted earnings of $2.15 per share beat the consensus estimate by 2.4% and improved 25% year over year. Total revenues of $1.36 billion beat the consensus mark by 2.7% and were up 12% year over year. The company generated closed sales of $112 million in the quarter, up 55% year over year.
Revenues by Segment
Revenues in the Investor Communication Solutions segment declined 12% from the year-ago quarter level to $1.1 billion.
Global Technology and Operations segment's recurring fee revenues came in at $314 million, up 19% year over year. This improvement was driven by acquisitions and organic growth. Higher trading volumes resulting from market volatility and onboarding of new sales benefited the segment’s internal growth.
Adjusted operating income of $335 million improved 25% year over year. Adjusted operating income margin increased to 24.6% from 22.1% in the prior-year quarter.
Balance Sheet and Cash Flow
Broadridge exited the quarter with cash and cash equivalents of $476.6 million compared with the $402.1 million witnessed at the end of the prior quarter. Long-term debt was $1.4 billion compared with the $1.7 billion recorded at the end of the previous quarter.
The company generated $442.6 million of cash in operating activities and capex was $14.2 million in the quarter. Broadridge paid out $62 million in dividends in the reported quarter.
Fiscal 2021 Guidance
Broadridge expects revenue growth in the range of 0-4%. It anticipates recurring revenue growth of 2-6%. Adjusted EPS growth is expected to be 4% to 10%. Adjusted operating income margin is estimated to be up by around 100 basis points. Closed sales are anticipated to be between $190 million and $235 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -21.49% due to these changes.
Currently, Broadridge Financial has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Broadridge Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.