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Broadridge Financial (BR) Up 1.2% Since Last Earnings Report: Can It Continue?

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  • BR

A month has gone by since the last earnings report for Broadridge Financial Solutions (BR). Shares have added about 1.2% 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 Q1 Earnings & Revenues Surpass Estimates

Broadridge ported impressive first-quarter fiscal 2022 results, wherein both earnings and revenues beat the Zacks Consensus Estimate.

Adjusted earnings of $1.07 per share beat the consensus estimate by 4.9% and were up 9% year over year. Total revenues of $1.2 billion surpassed the consensus mark by 4.6% and were up 17% year over year. The company generated closed sales of $30 million in the quarter, down 6% year over year.

Revenues by Segment

Revenues in the Investor Communication Solutions segment increased 14% from the year-ago quarter’s level to $854 million. Global Technology and Operations segment revenues came in at $341 million, up 21% from the year-ago quarter’s figure. The improvement was mainly driven by the Itiviti acquisition.

Revenues by Type

Recurring fee revenues of $751 million increased 16% from the year-ago quarter’s level. Event-driven fee revenues came in at $76 million, up 69% year over year. Distribution revenues increased 11% year over year to $367 million.

Operating Results

Adjusted operating income of $177 million increased 17% year over year. Adjusted operating income margin stayed flat year over year at 14.8%.

Balance Sheet and Cash Flow

Broadridge exited the quarter with cash and cash equivalents of $317 million compared with $275 million at the end of the prior quarter. Long-term debt was $4.2 billion compared with $3.9 billion at the end of the prior quarter.

The company used $135.4 million of cash in operating activities and capex was $5.7 million in the quarter. Broadridge paid out $66.8 million in dividends in the reported quarter.

Fiscal Guidance

Broadridge expects recurring revenue growth of 12-15%. Adjusted earnings per share (EPS) growth is expected to be 11-15%. Adjusted operating income margin is estimated to be up by around 19%. Closed sales are anticipated between $240 million and $280 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -15.5% due to these changes.

VGM Scores

At this time, Broadridge Financial has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, 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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