Broadridge Financial Solutions Inc.BR has been investors' favorite for quite some time as evident from its price momentum. The stock has soared 57.6% over the past year, substantially outperforming the 8.7% gain of the industry it belongs to.
The stock has a stellar record of positive earnings surprises, having beaten the Zacks Consensus Estimate in three of the last four quarters, with an average positive surprise of 21.2%.
In the last quarterly results, the company reported non-GAAP earnings of 79 cents per share (excluding acquisition and amortization related expenses), surpassing the Zacks Consensus Estimate of 58 cents. Also, quarterly earnings increased over two-fold on a year-over-year basis.
A higher level of event-driven activities resulted in a 13.5% year-over-year increase of revenues to $1.013 billion, which came ahead of the Zacks Consensus Estimate of $954 million. Notably, the company's fee revenues soared a whopping 227% to $97 million during the quarter, primarily due to higher proxy contest and mutual-fund proxy activities.
Broadridge Financial Solutions, Inc. Revenue (TTM)
The company generates recurring revenues and a good percentage of its business comes from recurring fees, which include contributions from the Net New Business and acquisitions related synergies. We believe, higher recurring revenues, internal growth, the contribution from Net New Business, increased distribution revenues and acquisition-related synergies are also being the top-line drivers for the company.
Notably, Broadridge also positively revised its fiscal 2018 outlook. The company now projects revenue growth to be 2-4% compared with the earlier guidance of 2-3%. Adjusted earnings are now projected to surge 27-31%, up from the previous expectation of 15-19%. Management also raised free cash flow guidance range to $500-$550 million from $400-$450 million.
The rise in the guidance keeps us optimistic about the near-term results. We are also positive about the company's product launches, share repurchase programs and dividend-paying initiatives. Moreover, its business relations with the likes of Accenture ACN and Amazon Web Services are looking promising for the long term.
Also, Broadridge has a Growth Style Score of A, which indicates that the stock is more suitable for growth investors. The stock has a long-term expected earnings per share growth rate of 10% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Keeping these positives in mind, we believe that Broadridge is one such stock that deserves a place in investors' portfolio.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.