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BROADRIDGE FINANCIAL SOLUTIONS $21.70 – New York symbol BR

BROADRIDGE FINANCIAL SOLUTIONS $21.70 (New York symbol BR: TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 124.9 million; Market cap: $2.7 billion; Dividend yield: 3.0%) serves the investment industry in three main areas: investor communications; securities processing; and transaction clearing. The company processes 90% of all proxy votes in the U.S.

Broadridge’s earnings rose 11.0% in the three months ended March 31, 2012, to $36.2 million from $32.6 million a year earlier. Earnings per share rose 12.0%, to $0.28 from $0.25, on fewer shares outstanding. Sales rose 3.8%, to $547.0 million from $527.1 million.

Contributions from recently purchased companies helped push up Broadridge’s latest results. As well, the company continues to do a good job of attracting new clients and holding on to existing ones.

The company has also outsourced its data centre operations to IBM under a contract that doesn’t expire until June 2022. That’s saving it roughly $25 million a year over the length of the deal.

Broadridge faces little threat to its dominance in the proxy business. As well, increasingly complex U.S. securities regulations and its long-term client contracts give it steady profits and help insulate it from economic slowdowns.

As well, no customer supplies more than 7% of Broadridge’s revenue, and the company continues to diversify geographically: Clients in over 50 countries now use its systems to process securities transactions. Both of these factors help cut the company’s risk.

Broadridge expects to earn between $1.50 and $1.60 a share this year. The stock trades at just 14.0 times the midpoint of this range.

Broadridge is still a buy.

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