Broadridge Financial Solutions, Inc.
) went up 1.2% on Aug 8, primarily due to an increase in its top
and bottom lines on a year-over-year basis.
Broadridge reported adjusted earnings of $1.16 per share in the
fourth quarter of fiscal 2014, which missed the Zacks Consensus
Estimate by a couple of cents. However, earnings increased from
$1.15 per share reported in the year-ago quarter.
Broadridge's fourth-quarter revenues of $885.9 million increased
2.4% from the year-ago quarter and beat the Zacks Consensus
Estimate of $874.0 million. Year-over-year revenues were driven by
recurring fee revenues (up 9% year over year), which also include
contribution from Net New Business.
Moreover, revenues from the Investor Communication Solutions
segment (81% of total revenue) increased 3.6% from the year-ago
quarter to $714.5 million. The improvement was attributable to
higher recurring revenues from new business and higher internal
growth from market-based activities.
The Securities Processing Solutions segment (19% of total revenue)
reported revenues of $174.1 million, up 0.5% from the year-ago
quarter. The increase was driven by strength in new business.
Broadridge's gross margins expanded 297 basis points on a
year-over-year basis to 37.8% primarily due to a higher revenue
base. The company's adjusted earnings before interests and taxes
(EBIT) margins contracted from 25.6% to 24.1% during the same
period of time primarily due to higher expenses.
The company reported adjusted net income of $144.6 million or $1.16
per share, which increased from $142.5 million or $1.15 per share
reported in the year-ago quarter.
Broadridge exited the quarter with cash and cash equivalents of
$347.6 million compared with $244.4 million in the previous
quarter. Long-term debt remained flat sequentially at $524.1
million. Cash flow from operations amounted to $388.0 million
during the six months ended Jun 2014.
During the quarter, Broadridge repurchased 1.9 million shares and
declared a dividend of approximately 27 cents per share.
Fiscal 2015 Guidance
Broadridge provided its fiscal 2015 outlook. Broadridge's
fiscal-2015 revenue growth is projected at 4% to 6% while recurring
revenue growth is expected in the range of 5% to 7%. The company
expects recurring revenues from closed sales to be the key growth
driver. Recurring revenues from closed sales are forecast in the
range of $110.0 to $150.0 million. Non-GAAP margin is expected
between 17.3% and 17.7%.
Adjusted earnings per share are also expected in the range of
$2.42???$2.52 (mid-point $2.47), while the Zacks Consensus Estimate
is pegged at $2.48 per share. Management also expects free cash
flow to range within $320 to $370 million.
Apart from this, Broadridge expects the Emerald acquisition to
complement its sales, education and client communications
capabilities, strengthening its platform and expanding it into the
Broadridge reported mixed fourth-quarter results, with the bottom
line missing the Zacks Consensus Estimate but the top line
surpassing the same. The year-over-year comparisons were favorable.
The company witnessed higher recurring revenues and growth in new
businesses. Moreover, the company provided an encouraging
fiscal-2014 earnings outlook.
We remain optimistic on Broadridge's strategic acquisitions,
product launches, share repurchase program and dividend paying
initiatives. We also believe Broadridge's close association with
) will be beneficial in the long term. However, competition from
DST Systems Inc. (
) and pricing pressure remain the headwinds for the company.
Currently, Broadridge has a Zacks Rank #2 (Buy). Investors can also
consider F5 Networks, Inc. (
) which has a Zacks Rank #1 (Strong Buy) and is worth buying.
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