A month has gone by since the last earnings report for Broadridge Financial Solutions (BR). Shares have added about 0.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Broadridge Q4 Earnings Meet Estimates
Broadridge’s fourth-quarter fiscal 2019 earnings came in line with the Zacks Consensus Estimate but revenues missed the same.
Adjusted earnings came in at $1.72 cents per share, down 8% year over year. Total revenues of $1.21 billion lagged the consensus mark by $13 million and were down 8% year over year.
Revenues by Segment
Revenues in the Investor Communication Solutions segment declined 11% from the year-ago quarter’s level to $990 million. Global Technology and Operations segment revenues came in at $253 million, up 8% from the year-ago quarter’s figure. The improvement was driven by acquisitions, internal growth and higher net new business from closed sales.
Revenues by Type
Recurring fee revenues of $813 million declined 6% from the year-ago quarter’s level. Event-driven fee revenues of $51 million decreased 16% year over year, mainly due to lower mutual fund proxy activity. Distribution revenues were down 11% year over year to $378 million, due to lower transactional print volumes, decline in Event-driven fee activity, and the impact of the ASC 606 revenue accounting change.
Adjusted operating income of $267 million declined 8% year over year due to decrease in recurring fee revenues. Adjusted operating income margin increased to 22.1% from 22% in the prior-year quarter.
Balance Sheet and Cash Flow
Broadridge exited the fiscal fourth quarter with cash and cash equivalents of $273.2 million compared with $292.1 million at the end of the prior quarter. Long-term debt was $1.47 billion compared with $1.17 billion at the end of the prior quarter. The company generated $399.1 million of cash from operating activities and capex was $19.7 million in the quarter. Non-GAAP free cash flow was $372.8 million. Broadridge paid out $56.1 million in dividends in the reported quarter.
Fiscal 2020 Guidance
Total revenues are expected to grow 3. Recurring fee revenue growth is anticipated in the range of 8-10%. Adjusted operating income margin is estimated to be approximately 18%. Closed sales are anticipated to be between $190 million and $230 million. Adjusted EPS are expected to register 8-12% growth.
How Have Estimates Been Moving Since Then?
Estimates review followed a downward path over the past two months. The consensus estimate has shifted -7.52% due to these changes.
At this time, Broadridge Financial has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
Broadridge Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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