Why Is Broadridge Financial (BR) Down 4% Since Last Earnings Report?
A month has gone by since the last earnings report for Broadridge Financial Solutions (BR). Shares have lost about 4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Broadridge Financial due for a breakout? 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's Q2 Earnings & Revenues Surpass Estimates
Broadridge reported impressive second-quarter fiscal 2022 results, with earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings of 83 cents (excluding 43 cents from non-recurring items) per share beat the consensus estimate by 2.5% and rose 13.7% year over year. Total revenues of $1.3 billion surpassed the consensus mark by 4.3% and were up 19.4% year over year. The company generated closed sales of $83 million in the quarter, up 87% year over year.
Revenues by Segment
Revenues in the Investor Communication Solutions segment increased 15% from the year-ago quarter’s level to $893 million. Global Technology and Operations segment revenues came in at $371 million, up 30% from the year-ago quarter’s figure. The upside was mainly driven by the Itiviti acquisition.
Revenues by Type
Recurring fee revenues of $798 million increased 19% from the year-ago quarter’s level. The uptick can be attributed to new business as well as internal and acquisition-related growth. Event-driven fee revenues came in at $65 million, up 44% year over year. The surge was backed by increased mutual fund proxy activity and mutual fund communications. Distribution revenues increased 17% year over year to $401 million. The uptick was primarily due to the increase in customer communications mailings and the recent postage rate increase.
Operating Results
Adjusted operating income of $141 million increased 19% year over year. Adjusted operating income margin stayed flat year over year at 11.2%.
Balance Sheet and Cash Flow
Broadridge exited the quarter with cash and cash equivalents of $281.2 million compared with $317 million at the end of the prior quarter. The long-term debt was $4.16 billion compared with $4.2 billion at the end of the prior quarter.
The company provided $40.8 million of cash in operating activities and capex was $12.2 million in the quarter. Broadridge paid out $74.4 million in dividends in the reported quarter.
Fiscal Guidance
Broadridge expects recurring revenue growth to be in the higher end of the 12-15% range. Adjusted earnings per share (EPS) growth is continued to be expected to be 11-15%.
Adjusted operating income margin is now estimated to be up by around 18.5% (previous guidance was 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 fresh estimates.
The consensus estimate has shifted -10.91% due to these changes.
VGM Scores
At this time, Broadridge Financial has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Broadridge Financial Solutions, Inc. (BR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
