BROADRIDGE FINANCIAL SOLUTIONS $24.14 - New York symbol BR

BROADRIDGE FINANCIAL SOLUTIONS $24.14 New York symbol BR: TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 124.1 million; Market cap: $3.0 billion; Dividend yield: 2.7%) serves the investment industry in three main areas: investor communications; securities processing; and transaction clearing. Broadridge’s systems help its customers cut costs.

Broadridge’s earnings jumped 45.3% in the three months ended December 31, 2011, to $15.4 million from $10.6 million a year earlier. Before one-time items, earnings per share rose 50.0%, to $0.12 from $0.08, on fewer shares outstanding. Revenue rose 8.5%, to $479.8 million from $442.3 million.

Timely acquisitions starting to pay off

Recent acquisitions helped push up Broadridge’s latest results. For example, in January 2011, Broadridge bought Matrix Financial Solutions for $201 million. This company processes trades and provides administrative services to mutual funds.

In September 2011, Broadridge purchased Paladyne Systems Inc. for $76.5 million. Paladyne’s software helps hedge funds, mutual fund companies and wealth management firms manage their investments and lower their operating costs.

Broadridge has also outsourced its data centre operations to IBM under a contract that doesn’t expire until June 2022. That should save Broadridge $25 million a year over the length of the deal.

The company expects to earn between $1.50 and $1.60 a share this year. The stock trades at a reasonable 15.6 times the midpoint of this range.

Broadridge is still a buy.

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