A wise investment decision involves buying well-performing stocks at the right time while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.
Here we focus on Broadridge Financial Solutions, Inc. (BR - Free Report) , which is an outsourcing stock that performed extremely well over the past year and has the potential to carry the momentum forward. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.
Why an Attractive Pick?
Share Price Appreciation: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourse over the past year. Broadridge returned a whopping 52.8%, which compared favorably with the industry’s increase of 27.5%.
Solid Rank & VGM Score: Broadridge has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: Three estimates for 2018 moved north over the past 60 days versus no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for 2018 climbed 4.2%.
Positive Earnings Surprise History: Broadridge has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 23.6%.
Strong Growth Prospects: The Zacks Consensus Estimate for 2018 earnings of $4.21 reflects year-over-year growth of 34.5%. Earnings are expected to grow 7% in 2019. The projected long-term earnings per share growth rate for Broadridge stands at 10%.
Broadridge’s recurring fee revenues have been growing significantly over the past few years and constitutes majority of its top line. The company currently has a large recurring revenue backlog of around $250 million, which provides good visibility on its organic revenues in the near to mid-term. Investor Communication Solutions (ICS), which is Broadridge’s biggest revenue contributing segment (83% of total revenues in 2017), should deliver better numbers as the company sees strong demand trends in its core mutual fund governance products.
Broadridge Financial Solutions, Inc. Revenue (TTM)
Broadridge’s Global Technology and Operations business looks well poised as its pipeline includes large deals. Of these deals, one or more could close by the end of this year. The company’s capital market business should grow as markets continue to globalize and regulatory changes continue to happen. Its investment management business is benefiting from increase in scrutiny on money movements. Further, growing demand for transparency in corporate governance should drive the governance business.
With increasing demand for technology solutions, Broadridge has ramped up investments in digital, AI, cloud and blockchain particularly via acquisitions. These investments be beneficial in the long run.
Other Stocks to Consider
Some other top-ranked stocks in the broader Business Services sector include The Dun & Bradstreet Corporation (DNB - Free Report) , TransUnion (TRU - Free Report) and FLEETCOR Technologies, Inc. (FLT - Free Report) . All the stocks carry 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 Dun & Bradstreet, TransUnion and FLEETCOR Technologies is 4.5%, 10% and 16.5%, respectively.
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