Broadridge Financial Solutions, Inc. (BR - Free Report) has an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.
The Zacks Consensus Estimate calls for the company’s fiscal 2020 and 2021 earnings to be up 7.5% and 9.5%, respectively.
Factors that Bode Well for Broadridge
The company has a robust business model that ensures a significant percentage of business from recurring fee revenues, including contributions from net new business, internal growth and acquisition-related synergies. In the second quarter of fiscal 2020, recurring fee revenues of $648 million increased 7% year over year and contributed 67% to total revenues.
Broadridge has supplemented its internal growth with strategic acquisitions. The recent acquisitions of Rockall, RPM Technologies, Shadow and Fi360 are contributing significantly toward strengthening the company’s core franchise business across governance, capital markets and wealth.
Broadridge has a consistent track record of rewarding shareholders through share repurchases and dividend payments. This not only instills investors’ confidence but also boosts its earnings per share.
Broadridge’s balance sheet is highly leveraged. As of Dec 31, 2019, long-term debt was $1.45 billion, while cash and cash equivalents were $234 million. Such a cash position implies that the company needs to generate an adequate amount of operating cash flow to service its debt. High debt might limit its future expansion and worsen the risk profile.
Moreover, frequent acquisitions escalate costs and integration risks apart from being a distraction for management.
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 Parsons Corporation (PSN - Free Report) , CoreLogic (CLGX - Free Report) and GreenSky (GSKY - Free Report) , each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected EPS (three to five years) growth rate for Parsons, CoreLogic, and GreenSky is 10%, 11% and 13%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>