A wise investment decision involves buying well-performing stocks at the right time, while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.
Here we focus on Broadridge Financial Solutions, Inc. (NYSE:BR) , an outsourcing stock that has performed extremely well so far this year and has the potential to carry the momentum forward. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes it an Attractive Pick?
An Outperformer: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourse on a year-to-date basis. Shares of Broadridge have returned 36.3% on a year-to-date basis, outperforming 28% and 17.3% rally of the industry and the Zacks S&P 500 composite, respectively.
Solid Rank & VGM Score: Broadridge currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. Over the past 60 days, the Zacks Consensus Estimate for fiscal 2019 earnings has increased 0.6%. For fiscal 2020, bottom-line estimates have moved up 0.2% over the same time period.
Solid Growth Prospects: The Zacks Consensus Estimate for fiscal 2019 earnings of $4.65 indicates year-over-year growth of 10.9%. Earnings are expected to grow 9.5% year over year in fiscal 2020. Expected long-term earnings per share growth rate for Broadridge stands at 10%.
Growth Factors: Broadridge has a strong business model, backed by higher recurring fee revenues. It has diversified products and services to support top-line growth. Further, the company continues to enhance internal growth through strategic buyouts.
In 2019 so far, Broadridge completed acquisitions of retirement plan custody and trust assets from TD Ameritrade Trust Company; RPM Technologies; Rockall and certain private fund regulatory reporting capabilities from PivotData and Sol Hedge. In 2018, the company had acquired MackayWilliams LLP, FundAssist Limited and ActivePath. In 2017, Broadridge had acquired Summit Financial Disclosure, Spence Johnson and Message Automation Limited. It had made six acquisitions in 2016. We believe these acquisitions have helped Broadridge to evolve as one of the leading financial and outsourcing service providers, with an expanded product portfolio and customer reach.
The company is making significant investments in digital, AI, cloud and blockchain which are expected to enhance the value of its core product offerings over time. Consistent demand for technology solutions on a global basis should help Broadridge to gain significantly from SaaS-based offerings. Growing trends like growing demand for data and analytics, mutualization, and digitization should drive sales.
The company has been consistent in rewarding its shareholders through share repurchases and dividend payments. In the first nine months of fiscal 2019, Broadridge paid $155.1 million in dividends. Such moves indicate the company’s commitment to create value for shareholders and underline its confidence in the business.
Other Key Picks
Other top-ranked stocks in the broader Zacks Business Services sector include Delphi (NYSE:DLPH) , ICF International (NASDAQ:ICFI) and Accenture (NYSE:ACN) , each carrying a Zacks Rank #2. Long-term expected EPS (three to five years) growth rate for Delphi, ICF International and Accenture is 9%, 10% and 10.3%, respectively.
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