Additional clients signing long-term contracts led to a 10.4% jump in revenue for this company during the most-recent quarter. Recurring revenue in particular grew 15.9%.
An industry push for improved efficiency and lower costs should continue to spur demand, making this a top long-term pick.
Meanwhile, the stock trades at 26.7 times the company’s 2022 earnings forecast.
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BROADRIDGE FINANCIAL SOLUTIONS INC. (New York symbol BR; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing.
In its fiscal 2022 third quarter, ended March 31, 2022, revenue rose 10.4%, to $1.53 billion from $1.39 billion a year earlier. Excluding one-time items, the company earned $1.93 in the quarter. That’s up 9.7% from $1.76. Broadridge continued to invest to support its growth and that held profits back slightly.
The company continues to sign up new clients to long-term contracts, which further cuts its risk. In the same fiscal 2022 third quarter ended March 31, 2022, revenue from recurring contracts rose 15.9% from a year earlier. They also accounted for 66.0% of its total revenue.
It now stands to gain from the growing push by the financial services industry to improve efficiency and lower costs. New regulations in the U.S. (Regulation Best Interest) and Europe (Shareholder Rights Directive) also brighten its outlook.
Longer term, growing consumer demand for passive investment products like ETFs should also benefit Broadridge and its investor communications unit. In the meantime, the integration of recent acquisitions is going well and continues to boost the company’s profitability.
Broadridge has raised its dividend each year since Automatic Data Processing spun it off to its shareholders in 2007. The latest increase came in October 2021 when Broadridge raised your quarterly dividend by 11.3%. Investors now receive $0.64 a share, up from $0.575. The new annual rate of $2.56 yields 1.7%.
Over the past 5 years, it has increased the dividend rate by an average of 14.2% annually. Its TSI Dividend Sustainability Rating is Above Average.
Broadridge will probably earn $6.40 a share in the fiscal year ended June 30, 2022. The stock trades at 26.8 times that estimate. That’s an acceptable p/e as the company continues to gain from financial services firms looking to outsource work to cut back-office and staffing costs.
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