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Broadridge (BR) Q4 Earnings: What's in Store for the Stock?

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Broadridge Financial Solutions Inc. (BR - Free Report) is set to report fourth-quarter fiscal 2016 results on Aug 9. Last quarter, the company posted a positive earnings surprise of 18.37%. Notably, Broadridge has surpassed the Zacks Consensus Estimate in all of the preceding four quarters with an average positive surprise of 14.30%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Broadridge is a leading global provider of technology-based outsourcing solutions to the financial services industry. We believe Broadridge’s strategic initiatives such as acquisitions and product launch will continue driving its top- and bottom-line results. Moreover, the company’s close business relations with Accenture Plc (ACN - Free Report) will positively impact its revenues and earnings in the to-be-reported quarter.

Furthermore, strength in the company’s products and services, led by the Investor Communications business, allows it to brave the ongoing economic challenges. We believe that these positives, combined with new product initiatives, will enable the company to counter macro headwinds to a large extent. They will also provide Broadridge an opportunity to grow further as and when the financial services market improves.

However, competition and pricing pressure remain major concerns.

BROADRIDGE FINL Price and EPS Surprise


Earnings Whispers

Our proven model does not conclusively show that Broadridge is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.46. Hence, the difference is 0.00%.

Zacks Rank: Broadridge holds a Zacks Rank #2. Though a favorable Zacks Rank increases the predictive power of ESP, a 0.00% ESP makes surprise prediction difficult.

Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of companies that are worth considering as our model shows that they have the right combination of the two elements needed to post an earnings beat:

Analog Devices Inc. (ADI - Free Report) , with an Earnings ESP of +2.63% and a Zacks Rank #2.

Alibaba Group Holding Ltd. (BABA - Free Report) , with an Earnings ESP of +28.95% and a Zacks Rank #3.

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