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Here's Why You Should Retain Broadridge Financial Stock Now

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Broadridge Financial Solutions, Inc. (BR - Free Report) has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

The company’s earnings for fiscal 2025 and 2026 are expected to improve 10.1% year over year. Revenues are expected to increase 6.3% in fiscal 2025 and 5.7% in fiscal 2026.

Factors That Augur Well

Fundamental trends like growing demand for data and analytics, mutualization and digitization are likely to help drive sales growth for BR. The company maintains a strong business model with substantial recurring revenue streams, which provides good visibility on its organic revenues in the near to mid-term.

A significant portion of the income is derived from recurring fees, encompassing net new business, internal expansion, and acquisition-related benefits. In fiscal 2023, recurring revenues accounted for nearly 66% of the total revenues despite economic uncertainty. Total revenues grew 6% year over year in fiscal 2023, following respective 14% and 10% growth in fiscal 2022 and 2021.

Broadridge is executing well on its growth strategy in governance, capital markets and wealth management. On the governance front, it is utilizing the next generation of digital communications and enhancing print and mail services through advanced technology. In capital markets, Broadridge continues to develop its global platform capabilities and use next-generation solutions to improve its offerings. On the wealth management front, Broadridge has developed a comprehensive wealth management platform that offers top-notch systems and data integration capabilities and enables clients.

Increasing presence in EMEA and APAC through the Itiviti acquisition has boosted Broadridge’s global technology and operations segment. The segment's revenues increased 5% year over year in fiscal 2023. Itiviti is an effective strategic fit for the company’s capital market franchise and contributes significantly to its international revenue growth.

The recent acquisition of AdvisorTarget is expected to expand Broadridge’s capabilities in digital distribution and marketing for asset management and wealth firms, thereby strengthening the company’s market position and driving growth in the digital marketing space. The buyout will bolster the company's suite of tools, combining AdvisorTarget’s advanced marketing automation and analytics technology.

Broadridge has a consistent track record of dividend payments. In fiscal 2023, 2022, and 2021, it paid $331.0 million, $290.7 million and $261.7 million in dividends, respectively. Such moves indicate the company’s commitment to return value to shareholders and underline its confidence in business. We are expecting steady growth in income, which will translate to steady cash flow, enabling Broadridge to pay out stable dividends. Partly due to these positives, the company’s shares have gained 24.8% over the past year.

Some Risks

Client concentration is a major risk for Broadridge. It primarily serves clients in the financial services industry. In each of its fiscal years 2023, 2022 and 2021, the largest single client accounted for roughly 7%, 7% and 6% of the company's consolidated revenues, respectively.

Broadridge is heavily exposed to the securities industry (including brokerages and asset managers). A material downturn in the markets will likely have a negative bearing on this industry and affect the company’s business.

Zacks Rank and Stocks to Consider

Broadridge currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks from the broader Zacks Business Services sector are Genpact (G - Free Report) and Jamf (JAMF - Free Report) .

Genpact carries a Zacks Rank of 2 (Buy) at present. It has a long-term earnings growth expectation of 8.4%.G delivered a trailing four-quarter earnings surprise of 6.9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Jamf currently carries a Zacks Rank of 2. The company has a long-term earnings growth expectation of 57%. JAMF delivered a trailing four-quarter earnings surprise of 15.7%, on average.


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