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Here's Why You Should Retain Broadridge (BR) in Your Portfolio

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Broadridge Financial Solutions, Inc. (BR - Free Report) has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of quality and sustainability of its growth.

The company’s earnings for fiscal 2022 and fiscal 2023 are expected to grow 13.3% and 9.1%, respectively. The stock has rallied 24.5% in the past year.

Zacks Investment Research
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Factors That Auger Well

Broadridge has a consistent track record of rewarding shareholders through share repurchases and dividend payments. In fiscal 2020, the company returned $241 million in dividends. In fiscal 2019, Broadridge returned $466.2 million through a combination of dividend payment of $211.2 million and share repurchases worth $225 million. In fiscal 2018, Broadridge repurchased shares worth $225 million and paid out $165.8 million in dividends. Such moves reflect on the company’s commitment to create value for shareholders and underline its confidence in its business.

The company’s business model ensures significant recurring-fee revenues, including contributions from net new business, internal growth and acquisition-related synergies. In the fourth quarter of fiscal 2021, recurring-fee revenues of $1.1 billion increased 15% year over year.

Risks Associated

Broadridge has a debt-laden balance sheet.  The total debt to total capital ratio at the end of fourth-quarter fiscal 2021 stood at 0.68, higher than the previous quarter's 0.52. An increase in debt-to-capitalization ratio indicates higher risk of insolvency in challenging times.

Further, the company’s cash and cash equivalent of $275 million at the end of fourth-quarter fiscal 2021 was well below its total debt level of $3.88 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. However, the company has no short-term debt to clear off.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the broader Zacks Business Services sector are ManpowerGroup Inc. (MAN - Free Report) , Cross Country Healthcare, Inc. (CCRN - Free Report) and Genpact Limited (G - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for ManpowerGroup, Cross Country Healthcare and Genpact is pegged at 24.2%, 9.9% and 14.7%, respectively.