BROADRIDGE FINANCIAL SOLUTIONS $32.80 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 119.1 million; Market cap: $3.9 billion; Dividend yield: 2.6%) continues to hit all-time highs, but we think the stock still has room to rise.
Broadridge serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. It processes 90% of all proxy votes in the U.S. and Canada.
In its fiscal 2013 fourth quarter, which ended June 30, 2013, Broadridge’s earnings jumped 61.4%, to $134.6 million from $83.4 million a year earlier. Per-share earnings rose 67.2%, to $1.12 from $0.67, on fewer shares outstanding.
If you disregard unusual items, such as writedowns and costs to integrate recent acquisitions, Broadridge’s per-share earnings would have risen 12.7%, to $1.15 from $1.02. On that basis, the company’s latest earnings beat the consensus estimate of $1.09 a share.
Revenue rose 8.1%, to $865.1 million from $800.3 million. Broadridge continues to do a good job of attracting new clients. It also held on to 99% of its existing customers.
Excluding unusual items, Broadridge expects to earn between $2.00 and $2.10 a share in fiscal 2014. The stock is up 38% so far this year, but it still trades at a reasonable 16.0 times the midpoint of this range.
The company’s long-term debt of $524.5 million is a low 13.4% of its market cap, and it holds cash of $266.0 million, or $2.23 a share. Broadridge also recently raised its quarterly dividend by 16.7%, to $0.21 a share from $0.18. The new annual rate of $0.84 yields 2.6%.
Broadridge is a buy.
