It has been about a month since the last earnings report for Broadridge Financial Solutions (
BR Quick Quote BR - Free Report) . Shares have lost about 1.8% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Broadridge Q2 Earnings Estimates in Line, Revenues Top
Broadridge Financial Solutions reported second-quarter fiscal 2021 adjusted earnings of 73 cents per share that improved 38% year over year. Total revenues of $1.06 billion beat the consensus mark by 2.8% and were up 9% year over year. The company generated closed sales of $46 million in the quarter, up 2% year over year.
Revenues by Segment
Revenues in the Investor Communication Solutions segment increased 10% from the year-ago quarter's level to $784 million.
The segment’s recurring fee revenues were up 7% to $394 million. Event-driven fee revenues increased 46% to $45.2 million. Distribution revenues increased 9% to $345 million.
Global Technology and Operations segment's recurring fee revenues came in at $302 million, up 8% year over year. This improvement was driven by acquisitions and organic growth. Higher equity trading volumes benefited the segment’s internal growth.
Adjusted operating income of $119 million improved 26% year over year. Adjusted operating income margin increased to 11.2% from 9.7% in the prior-year quarter.
Balance Sheet and Cash Flow
Broadridge exited the quarter with cash and cash equivalents of $365.6 million compared with the $356.6 million witnessed at the end of the prior quarter. Long-term debt was $1.8 billion, flat with the previous quarter's figure.
The company generated $127.5 million of cash in operating activities and capex was $15.8 million in the quarter. Broadridge paid out $66.3 million in dividends in the reported quarter.
Fiscal 2021 Guidance
Broadridge expects total revenue growth in the range of 1-4% and recurring revenue growth of 3-6%. Adjusted EPS growth is expected to be 6% to 10%. Adjusted operating income margin is estimated to be up by around 18%. 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.
Currently, Broadridge Financial has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, 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 C. 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.