We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Strong Business Model Aids Broadridge (BR) Amid Integration Risks
Read MoreHide Full Article
Broadridge Financial Solutions,Inc. (BR - Free Report) is benefiting from its strong business model which enables the company to earn recurring revenues. The company’s internal growth is complemented by acquisitions. Its acquisition strategy exposes it to integration risks and added costs.
Broadridge Financial Solutions reported mixed third-quarter fiscal 2023 results with earnings beating the Zacks Consensus Estimate but revenues missing the same. Adjusted earnings of $2.05 per share beat the consensus mark by 2% and increased 6.2% year over year.
Total revenues of $1.65 billion missed the consensus mark by a slight margin but were up 7.3% year over year. Recurring revenues of $1.08 billion increased 8% from the year-ago quarter’s level. The company generated closed sales of $62 million in the quarter, up 8% year over year.
Broadbridge has outperformed its outsourcing industry gaining 12.1% compared with its industry’s 2.2% growth.
Broadbridge is generating recurring revenues by means of recurring fee revenues. Contributions from net new business, internal growth and acquisition-related synergies are boding well for the company. Revenues for fiscal 2022, 2021 and 2020 came in at $5.71 billion, $4.99 billion and $4.53 billion, respectively, representing year-over-year growth of approximately 14%, 10% and 4%, respectively.
Strategic acquisitions are one of the growth drivers of the company. The 2021 acquisition of Itiviti expands Broadridge’s back-office capabilities into the front office and deepens its multi-asset class solutions while the AdvisorStream acquisition is helping Broadridge boost its revenues and growth by providing personalized and consistent client communications. The company had no material acquisitions in 2022.
The company’s efforts to reward its shareholders are noteworthy. In 2022, 2021 and 2020, the company paid $290.7 million, $261.7 million and $241 million in dividends. These moves instill shareholders’ confidence in the stock. The company also boasts strong liquidity. Broadridge's current ratio at the end of third-quarter fiscal 2023 was pegged at 1.35, which is higher than the current ratio of 1.27 reported at the end of the prior-year quarter. This indicates the company is less likely to face trouble meeting its short-term debt obligations.
Some Concerning Points
Broadridge has been active on the acquisition front which has helped it improve its revenue situation and also exposed it to integration-related risks and higher cost burdens. The same is having a toll on the bottom line of the company.
Zacks Rank and Stocks to Consider
BR currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Business Services can consider the following stocks:
Green Dot (GDOT - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Green Dot’s revenues suggests a decline of 4.8% year over year to $338.2 million and the same for earnings indicates a 2.7% increase to 76 cents per share. The company has an impressive earning surprise history, beating the consensus mark in all four trailing quarters, the average surprise being 37.3%.
Maximus (MMS - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Maximus’ revenues suggests an increase of 6.9% year over year to $1.2 billion and the same for earnings indicates a 46.2% rise to $1.14 per share. The company has an impressive earning surprise history, beating the consensus mark in three instances and missing on one instance, the average surprise being 9.6%.
MMS has a VGM score of B along with a Zacks Rank of 1.
Rollins (ROL - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Rollins’ revenues suggests growth of 12.6% year over year to $803.6 million and the same for earnings indicates a 15% decrease to 17 cents per share. The company has an impressive earning surprise history, beating the consensus mark in three of the four trailing quarters and missing on one instance, the average surprise being 5.53%.
ROL currently carries a Zacks Rank of 2 and a Growth score of A.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Strong Business Model Aids Broadridge (BR) Amid Integration Risks
Broadridge Financial Solutions,Inc. (BR - Free Report) is benefiting from its strong business model which enables the company to earn recurring revenues. The company’s internal growth is complemented by acquisitions. Its acquisition strategy exposes it to integration risks and added costs.
Broadridge Financial Solutions reported mixed third-quarter fiscal 2023 results with earnings beating the Zacks Consensus Estimate but revenues missing the same. Adjusted earnings of $2.05 per share beat the consensus mark by 2% and increased 6.2% year over year.
Total revenues of $1.65 billion missed the consensus mark by a slight margin but were up 7.3% year over year. Recurring revenues of $1.08 billion increased 8% from the year-ago quarter’s level. The company generated closed sales of $62 million in the quarter, up 8% year over year.
Broadbridge has outperformed its outsourcing industry gaining 12.1% compared with its industry’s 2.2% growth.
Broadridge Financial Solutions, Inc. Price
Broadridge Financial Solutions, Inc. price | Broadridge Financial Solutions, Inc. Quote
Current Situation of BR
Broadbridge is generating recurring revenues by means of recurring fee revenues. Contributions from net new business, internal growth and acquisition-related synergies are boding well for the company. Revenues for fiscal 2022, 2021 and 2020 came in at $5.71 billion, $4.99 billion and $4.53 billion, respectively, representing year-over-year growth of approximately 14%, 10% and 4%, respectively.
Strategic acquisitions are one of the growth drivers of the company. The 2021 acquisition of Itiviti expands Broadridge’s back-office capabilities into the front office and deepens its multi-asset class solutions while the AdvisorStream acquisition is helping Broadridge boost its revenues and growth by providing personalized and consistent client communications. The company had no material acquisitions in 2022.
The company’s efforts to reward its shareholders are noteworthy. In 2022, 2021 and 2020, the company paid $290.7 million, $261.7 million and $241 million in dividends. These moves instill shareholders’ confidence in the stock. The company also boasts strong liquidity. Broadridge's current ratio at the end of third-quarter fiscal 2023 was pegged at 1.35, which is higher than the current ratio of 1.27 reported at the end of the prior-year quarter. This indicates the company is less likely to face trouble meeting its short-term debt obligations.
Some Concerning Points
Broadridge has been active on the acquisition front which has helped it improve its revenue situation and also exposed it to integration-related risks and higher cost burdens. The same is having a toll on the bottom line of the company.
Zacks Rank and Stocks to Consider
BR currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Business Services can consider the following stocks:
Green Dot (GDOT - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Green Dot’s revenues suggests a decline of 4.8% year over year to $338.2 million and the same for earnings indicates a 2.7% increase to 76 cents per share. The company has an impressive earning surprise history, beating the consensus mark in all four trailing quarters, the average surprise being 37.3%.
GDOT has a Value score of A and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Maximus (MMS - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Maximus’ revenues suggests an increase of 6.9% year over year to $1.2 billion and the same for earnings indicates a 46.2% rise to $1.14 per share. The company has an impressive earning surprise history, beating the consensus mark in three instances and missing on one instance, the average surprise being 9.6%.
MMS has a VGM score of B along with a Zacks Rank of 1.
Rollins (ROL - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Rollins’ revenues suggests growth of 12.6% year over year to $803.6 million and the same for earnings indicates a 15% decrease to 17 cents per share. The company has an impressive earning surprise history, beating the consensus mark in three of the four trailing quarters and missing on one instance, the average surprise being 5.53%.
ROL currently carries a Zacks Rank of 2 and a Growth score of A.