Broadridge Stock Up 21% in a Year: What Should You Know?

Broadridge BR had an impressive run over the past year. In the same time frame, the stock has gained 20.9% compared with the 10% rally of the industry it belongs to.

BR's revenues for 2024 and 2025 are anticipated to increase 7.7% and 5.5%, respectively, on a year-over-year basis.Its earnings for 2024 and 2025 are expected to grow 10.1% and 8.7%, respectively, year over year.

Reasons for the Upside

Broadridge's earnings surpassed the Zacks Consensus Estimate in the past three quarters and met in one, delivering an average earnings surprise of 6%.

The company offers SaaS-based BPO services, leveraging networks, data, and digital capabilities to reduce the cost of its clients. A strong business model, coupled with substantial recurring revenue streams,  provides good visibility to the company on its organic revenues in the near- to mid-term.

In fiscal 2023, recurring revenues accounted for nearly 66% of the top line despite ongoing economic uncertainty. Total revenues increased 6% on a year-over-year basis in fiscal 2023 and are anticipated to gain 7.6%, 5%, and 5.2% in 2024, 2025, and 2026, respectively.

The company is effectively executing its growth strategy in governance, capital markets, and wealth management. On the governance front, it is using the next generation of digital communications and enhancing print and mail services via advanced technology. In capital markets, the company continues to develop its global platform capabilities and improve its offerings using next-generation solutions. On the wealth management front, it is attracting significant interest in its broad suite of wealth capabilities.

In fiscal 2023, 2022, and 2021, the company paid $331.0 million, $290.7 million, and $261.7 million in dividends, respectively. Such a strategy helps the company to show commitment toward returning value to shareholders and underlines its business confidence. We are anticipating consistent income growth which will translate to steady cash flow, enabling Broadridge to pay out stable dividends.

Broadridge's current ratio (a measure of liquidity) at the end of third-quarter fiscal 2024 was pegged at 1.39, higher than the year-ago quarter's 1.35. A current ratio of more than 1 often indicates that the company will easily pay off its short-term obligations.

Zacks Rank & Stocks to Consider

BR currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Booz Kelly Services KELYA and Lightspeed POS LSPD.

Booz Kelly Services flaunts a Zacks Rank #1 (Strong Buy) at present. It has a long-term earnings growth expectation of 13%.

KELYA delivered a trailing four-quarter earnings surprise of 45.8%, on average.

Lightspeed POS is currently a Zacks #1 Ranked stock. It has a long-term earnings growth expectation of 33.4%.

LSPD delivered a trailing four-quarter earnings surprise of 191.7% on average.

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