What's In The Cards For Broadridge (BR) In Q2 Earnings?

Broadridge Financial Solutions, Inc. (NYSE:BR) is slated to release second-quarter fiscal 2018 results on Feb 8. Investors are keenly awaiting the earnings report of this technology-based outsourcing solutions provider to the financial services industry to see if it succeeds in delivering a positive surprise.

Notably, Broadridge has an impressive earnings surprise history. In the trailing four quarters, the stock surpassed the Zacks Consensus Estimate on three occasions and matched the same once, delivering an average positive surprise of 12.8%.

Let’s see how things are shaping up prior to this announcement.

What the Zacks Model Unveils

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Broadridge has a Zacks Rank #2 and its Earnings ESP is +1.45%. Therefore, the company is likely to deliver a positive surprise this quarter.

What to Expect?

The Zacks Consensus Estimate for second-quarter earnings is pegged at 58 cents per share. This indicates a year-over-year increase of 48.7%. Additionally, analysts polled by Zacks project revenues of roughly $953.7 million, indicating 6.9% growth from the year-ago quarter actual figure.

Factors to Consider

Notably, the company continues to supplement internal growth with strategic acquisitions. During the quarter, the company acquired Summit Financial Disclosure, a provider of financial document management solutions. The acquisition is anticipated to enrich the company’s offerings related to “corporate disclosure lifecycle”.

Additionally, the company also acquired Morningstar, Inc.’s 15(c) board consulting services business. The acquisition is anticipated to strengthen Broadridge’s ability to provide a comprehensive source for financial data required for the fulfillment of governance related responsibilities by the board of directors of mutual funds.

Moreover, in a bid to offer an innovative digital experience across financial services and other industries, the company expanded its strategic alliance with Amazon.com’s (NASDAQ:AMZN) Amazon Web Services (AWS) in December 2017. The collaboration effort will help to build a new solution that can store documents and data in a repository.

Furthermore, the company enhanced its client base with some prominent additions in the soon to-be-reported quarter. Earthport, a financial services firm, adopted “Broadridge's hosted service for Foreign Exchange and Cash Management processing”. Beta Capital Wealth Management chose the company’s solutions for a “comprehensive front to back office technology and operations solution.”

Broadridge also completed a blockchain-based pilot project along with Natixis and Societe Generale (PA:SOGN) aimed at optimizing the efficiency of “bilateral repurchase, or repo agreements.”

We believe all these initiatives and the strong business model of the company, a good percentage of which comes from recurring revenues are tailwinds that will help the company to deliver an impressive performance in the quarter under discussion.

Stocks to Consider

Here are a couple of companies which, per our model, also comprise the right combination of elements to beat on earnings this time around:

NVIDIA Corporation (NASDAQ:NVDA) has an Earnings ESP of +4.13% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Materials, Inc. (NASDAQ:AMAT) with an Earnings ESP of +0.57% and a Zacks Rank #2

Agilent Technologies, Inc. (NYSE:A) has an Earnings ESP of +1.21% and a Zacks Rank #3.

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