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Here's Why You Should Retain Broadridge (BR) Stock for Now

Zacks.com logo Zacks.com 11/18/2022

Broadridge Financial Solutions, Inc. BR is currently riding on a strong recurring revenue position and the Itiviti acquisition, which are helping it to grow internationally.

The company’s earnings for fiscal 2023 and 2024 are expected to improve 8.8% and 8.5%, respectively, year over year. Revenues are expected to increase 7.5% in fiscal 2023 and 5.1% in fiscal 2024. The stock has gained 4.3% in the past six months.

Tailwinds

Broadridge’s business is currently benefiting from positive trends such as strong growth in equity and fund records, transformation and digitization of the financial services industry, governance innovation through multiple product launches and an increase in omnichannel customer communication wins.

The company’s recurring fee revenues witnessed a CAGR of 7.5% in five years (2018-2022) and constitute the bulk of its top line. The company currently has a large recurring revenues backlog of around $440 million, which provides good visibility on its organic revenues in the near to mid-term.

Broadridge Financial Solutions, Inc. Revenue (TTM)

Broadridge Financial Solutions, Inc. Revenue (TTM) © Provided by Zacks.com Broadridge Financial Solutions, Inc. Revenue (TTM)

Broadridge Financial Solutions, Inc. revenue-ttm | Broadridge Financial Solutions, Inc. Quote

The company’s Global Technology and Operations business looks well poised to be driven by the Itiviti acquisition.Itiviti is an effective strategic fit for Broadridge’s capital market franchise and contributes significantly to the company’s international revenue growth.

The company’s capital market business is likely to grow as markets continue to globalize and regulatory changes continue to occur. The wealth and investment management business is benefiting from increased scrutiny of money movements. Furthermore, the growing demand for transparency in corporate governance should drive the governance business.

Some Risks

Broadridge's current ratio at the end of the September quarter was 1.23, lower than the 1.25 reported at the end of the prior quarter. A decline in the current ratio is not desirable as it indicates that the company may have problems meeting its short-term obligations.

Zacks Rank and Stocks to Consider

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

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Booz Allen Hamilton Holding Corporation BAH, Paychex, Inc. PAYX and Cross Country Healthcare, Inc. CCRN.

Booz Allen carries a Zacks Rank #2 (Buy) at present. BAH has a long-term earnings growth expectation of 7.5%.

Booz Allen delivered a trailing four-quarter earnings surprise of 8.8% on average.

Paychex carries a Zacks Rank of 2 at present. PAYX has a long-term earnings growth expectation of 7.5%.

Paychex delivered a trailing four-quarter earnings surprise of 8.6% on average.

Cross Country Healthcare currentlycarries a Zacks Rank #2. CCRN has a long-term earnings growth expectation of 6%.

CCRN delivered a trailing four-quarter earnings surprise of 10.1% on average.

 

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