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Here's Why You Should Hold Broadridge (BR) in Your Portfolio

·2 min read

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

The company’s earnings for fiscal 2021 and fiscal 2022 are expected to grow 10.1% and 9.2%, respectively. The stock has gained a massive 57.1% over the past year.

Factors That Auger Well

Broadridge has a consistent track record of rewarding shareholders through dividends. During fiscal 2020, the company paid cash dividends of $241 million. It paid out $211.2 million, $165.8 million and $152.2 million of dividends during fiscal years 2019, 2018 and 2017, respectively.

The company’s business model ensures significant recurring-fee revenues, including contributions from net new business, internal growth and acquisition-related synergies. In the second quarter of fiscal 2021, recurring-fee revenues of $696.2 million increased 7% year over year and contributed 67% to total revenues.

Some Risks

Broadridge’s total-debt-to-total-capital ratio of 0.56 was higher than the industry’s 0.39 at the end of the fiscal second quarter. A high debt-to-capitalization ratio indicates higher risk of insolvency in challenging times.

Further, the company’s cash and cash equivalent of $366 million at the end of the quarter was well below the debt level of $1.8 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. Broadridge, however, has no short-term debt to clear off.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocksin the broader Zacks Business Services sector are Gartner IT, Cross Country Healthcare CCRN and Charles River Associates CRAI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for Gartner, Cross Country Healthcare and Charles River is pegged at 13.5%, 12% and 13%, respectively.

Zacks Top 10 Stocks for 2021

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Charles River Associates (CRAI) : Free Stock Analysis Report

Broadridge Financial Solutions, Inc. (BR) : Free Stock Analysis Report

Gartner, Inc. (IT) : Free Stock Analysis Report

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