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Why Is Broadridge Financial (BR) Up 3.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Broadridge Financial Solutions (BR - Free Report) . Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Broadridge Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Broadridge Beats Q4 Earnings Estimates
Broadridge Financial Solutions, Inc. reported mixed third-quarter fiscal 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Adjusted earnings of $3.21 per share beat the consensus mark by 3.6% and increased 21.1% year over year. Total revenues of $1.83 billion missed the consensus mark by 2.5% but were up 6.7% year over year.
Recurring revenues of $1.26 billion increased 7% from the year-ago quarter’s level. The company generated closed sales of $90 million in the quarter, down 19% year over year.
Let’s check out the numbers in detail.
Revenues by Segment
Revenues in the Investor Communication Solutions segment increased 6% from the year-ago quarter’s level to $1.44 billion and beat our estimate of $1.38 billion. The Global Technology and Operations segment’s revenues came in at $401 million, lagging our estimate of $495.5 million but increasing 8% from the year-ago quarter’s figure. The improvement was mainly driven by net new business and internal growth.
Operating Results
Adjusted operating income of $531.2 million increased 21.9% year over year. This compares favorably with our expectation of an adjusted operating income of $500.4 million, up 14.9% year over year.
Adjusted operating income margin of 28.9% increased 360 basis points (bps) year over year. This compares with our expectation of an adjusted operating income margin of 26.6%, up 130 bps year over year.
Balance Sheet and Cash Flow
Broadridge exited the quarter with cash and cash equivalents of $252.3 million compared with $331.6 million at the end of the prior quarter. Long-term debt was $2.3 billion compared with the prior quarter’s $4.1 billion.
The company generated $729.2 million in cash from operating activities and capex was $17 million in the quarter. It paid out $85.3 million in dividends in the reported quarter.
Fiscal 2024 Guidance
Broadridge expects recurring revenue growth to be 6-9%. Adjusted earnings per share growth is expected to be 8-12%. Adjusted operating income margin is estimated to be around 20%. Closed sales are anticipated between $280 million and $320 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Broadridge Financial has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise Broadridge Financial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Broadridge Financial belongs to the Zacks Outsourcing industry. Another stock from the same industry, Automatic Data Processing (ADP - Free Report) , has gained 0.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
ADP reported revenues of $4.48 billion in the last reported quarter, representing a year-over-year change of +8.5%. EPS of $1.89 for the same period compares with $1.50 a year ago.
For the current quarter, ADP is expected to post earnings of $2.04 per share, indicating a change of +9.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.3% over the last 30 days.
ADP has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Why Is Broadridge Financial (BR) Up 3.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Broadridge Financial Solutions (BR - Free Report) . Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Broadridge Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Broadridge Beats Q4 Earnings Estimates
Broadridge Financial Solutions, Inc. reported mixed third-quarter fiscal 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Adjusted earnings of $3.21 per share beat the consensus mark by 3.6% and increased 21.1% year over year. Total revenues of $1.83 billion missed the consensus mark by 2.5% but were up 6.7% year over year.
Recurring revenues of $1.26 billion increased 7% from the year-ago quarter’s level. The company generated closed sales of $90 million in the quarter, down 19% year over year.
Let’s check out the numbers in detail.
Revenues by Segment
Revenues in the Investor Communication Solutions segment increased 6% from the year-ago quarter’s level to $1.44 billion and beat our estimate of $1.38 billion. The Global Technology and Operations segment’s revenues came in at $401 million, lagging our estimate of $495.5 million but increasing 8% from the year-ago quarter’s figure. The improvement was mainly driven by net new business and internal growth.
Operating Results
Adjusted operating income of $531.2 million increased 21.9% year over year. This compares favorably with our expectation of an adjusted operating income of $500.4 million, up 14.9% year over year.
Adjusted operating income margin of 28.9% increased 360 basis points (bps) year over year. This compares with our expectation of an adjusted operating income margin of 26.6%, up 130 bps year over year.
Balance Sheet and Cash Flow
Broadridge exited the quarter with cash and cash equivalents of $252.3 million compared with $331.6 million at the end of the prior quarter. Long-term debt was $2.3 billion compared with the prior quarter’s $4.1 billion.
The company generated $729.2 million in cash from operating activities and capex was $17 million in the quarter. It paid out $85.3 million in dividends in the reported quarter.
Fiscal 2024 Guidance
Broadridge expects recurring revenue growth to be 6-9%. Adjusted earnings per share growth is expected to be 8-12%. Adjusted operating income margin is estimated to be around 20%. Closed sales are anticipated between $280 million and $320 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Broadridge Financial has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise Broadridge Financial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Broadridge Financial belongs to the Zacks Outsourcing industry. Another stock from the same industry, Automatic Data Processing (ADP - Free Report) , has gained 0.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
ADP reported revenues of $4.48 billion in the last reported quarter, representing a year-over-year change of +8.5%. EPS of $1.89 for the same period compares with $1.50 a year ago.
For the current quarter, ADP is expected to post earnings of $2.04 per share, indicating a change of +9.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.3% over the last 30 days.
ADP has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.