Broadridge Financial Solutions, Inc. is a financial industry servicing company founded in 2007 as a spin-off from the company Automatic Data Processing or ADP. The company's main function is in securities processing, clearing and investor communications, while the main business of Broadridge is electronic proxy voting.
In 2010 the company expanded by acquiring NewRiver, Inc., an innovator in Electronic Investor Disclosure. On Jan. 7, 2011, it expanded once again when it acquired Matrix Financial Solutions, a provider of retirement products for third party administrators and other financial professionals. Finally on Sept. 8, 2011, Broadridge Financial Solutions acquired Paladyne Systems, Inc., a provider of investment management solutions.
Broadridge Financial Solutions, Inc. provides investor communications and technology-driven solutions for the financial services industry in the United States, Canada, the United Kingdom, and internationally. The company's Investor Communication Solutions segment processes and distributes proxy materials to investors in equity securities and mutual funds, as well as facilitates related vote processing services; and provides ProxyEdge, an electronic proxy delivery and voting solution. This segment also distributes regulatory reports and corporate action/reorganization event information, as well as tax reporting solutions. In addition, it offers financial information distribution and transaction reporting services, such as processing and distribution of account statements and trade confirmations, traditional and personalized document fulfillment and content management services, and marketing communications, as well as imaging, archival, and workflow solutions; and registered proxy, registrar, stock transfer, and record-keeping services. Further, this segment provides cloud-based marketing and customer communication tools; customer and account data aggregation and reporting services; mutual fund and retirement solutions, such as data-driven technology solutions; and mutual fund trade processing services. The company's Global Technology and Operations segment provides advanced computerized real-time transaction processing services that automate the securities transaction comprising desktop productivity tools, data aggregation, performance reporting, portfolio management, order capture and execution, trade confirmation, settlement, reference data, reconciliations, and accounting; multi-currency solutions to support real-time global trading; and managed services solutions that allow broker-dealers to outsource administrative functions relating to clearing and settlement, and asset servicing. The company was founded in 1962 and is headquartered in Lake Success, New York.
(Summary) (Company) (Chart)
29 December 2016
1yr Target $73.33
Payout Ratio 51.96%
1yr Cap Gain 9.69%
1yr Tot Return 11.66%
EPS (ttm) $2.54
EPS next yr $3.61
Forward P/E 18.51
EPS next 5yr 11.60%
1yr Price Support $41.87
Market Cap $7.90 Bil
Revenues $3.20 Bil
Earnings $307.70 Mil
Profit Margin 9.59%
Quick Ratio 1.40
Current Ratio 1.40
1yr RevGR 7.53%
3yr RevGR 5.97%
5yr RevGR 5.98%
1yr EarnGR 9.05%
3yr EarnGR 14.24%
5yr EarnGR 13.89%
1yr DivGR 11.11%
3yr DivGR 18.36%
5yr DivGR 14.86%
Broadridge is a leading global provider of investor communications and technology-driven solutions to banks, broker-dealers, mutual funds and corporate issuers. Their services include investor and customer communications, securities processing, and data and analytics solutions. In short, they provide the infrastructure that helps the financial services industry operate. With over 50 years of experience, they provide financial services with advanced, dependable, scalable and cost-effective integrated systems. Their systems help reduce the need for clients to make significant capital investments in operations infrastructure and allowing them to increase their focus on their core business activities. Broadridge delivers a broad range of solutions that helps their clients better serve their retail and institutional customers across the entire investment lifecycle, including pre-trade, trade, and post-trade processing functionality.
Their businesses operate in two reportable segments: Investor Communication Solutions and Global Technology and Operations. They serve a large and diverse client base across four client groups: capital markets, asset management, wealth management and corporations.
For capital markets, the company helps their clients lower costs and improve the effectiveness of their trade and account processing operations with support for middle and back office operations, administration, risk and compliance. For asset management, they support cross-asset, multi-currency investing across a range of brokers and executing venues from a single technology and operating solution. For wealth management, they provide advisors with tools to create a better investor experience, while also giving them a more streamlined, efficient and effective process. And they help corporations manage every aspect of their shareholder communications from registered and beneficial proxy processing to annual meeting support and transfer agency services.
Broadridge Financial Solutions offers Bank/Broker-Dealer Investor Communication Solutions, Customer Communication Solutions, Corporate Issuer Solutions, Advisor Solutions and Mutual Fund and Retirement Solutions through its investor communications solution segment. A large portion of this segment involves the processing and distribution of proxy materials to investors in equity securities and mutual funds, as well as the facilitation of related vote processing. In fiscal year 2016, the company processed approximately 80% of the proxy services of the outstanding shares in the US. ProxyEdge, the company's innovative electronic proxy delivery and voting solution for institutional investors and financial advisors, helps ensure the voting participation of the largest stockholders of many companies. They also provide the distribution of regulatory reports and corporate action/reorganization event information, as well as tax reporting solutions that help clients meet their regulatory compliance needs.
The company also provides customer communications, financial information distribution and transaction reporting services to financial services, corporations and mutual funds. These services include the processing and distribution of account statements and trade confirmations, traditional and personalized document fulfillment and content management services, marketing communications, and imaging, archival and work flow solutions that enable and enhance clients’ communications with investors and customers. All of these communications are delivered through print, electronic or digital channels. In fiscal year 2016, Broadridge processed over two billion investor and customer communications through a combination of print, electronic or digital channels. In addition, they provide corporations with registered proxy services as well as registrar, stock transfer and record-keeping services.
The advisor solutions enable financial advisors, wealth managers, and insurance agents to better engage with customers through cloud-based marketing and customer communication tools. Their marketing ecosystem integrates data, content and technology to drive new client acquisition and cross-sell opportunities through the creation of sales and educational content, including seminars and a library of financial planning topics as well as customizable advisor websites, search engine marketing and electronic and print newsletters. The advisor solutions also help advisors optimize their practice management through customer and account data aggregation and reporting. The company currently support approximately 100,000 professionals at more than 250 financial institutions with their advisor solutions.
The company's mutual fund and retirement solutions are a full range of tools for mutual funds, exchange traded fund providers and asset management teams. They include data-driven technology solutions for data management, analytics, investment accounting, marketing and customer communications. In addition, the compan provides mutual fund trade processing services for retirement providers, third party administrators, nancial advisors, banks and wealth management professionals through the subsidiary Matrix Financial Solutions, Inc.
Broadridge Financial Solutions is the leading middle and back office securities processing platform for North American and global broker dealers. The compan offers a suite of advanced computerized real-time transaction processing services that automate the securities transaction lifecycle, from desktop productivity tools, data aggregation, performance reporting, and portfolio management to order capture and execution, trade con rmation, settlement, reference data, reconciliations and accounting. Their services help financial institutions efficiently and cost-effectively consolidate their books and records, gather and service assets under management, focus on their core businesses, and manage risk. Provided on an application service provider basis, the company's platform is a global market solution, clearing and settling in over 70 countries. Their multi-currency solutions support real time global trading of equity, fixed income, mutual fund, foreign exchange, and exchange traded derivative securities in established and emerging markets. The company processes on average of over $5 trillion in equity and fixed income trades per day of U.S. and Canadian securities.
The company also provides business process outsourcing services that are known as Managed Services solutions, which support the operations of clients’ businesses including their securities clearing, recordkeeping, and custody related functions. The company's clients execute and clear their securities transactions and engage Broadridge to perform a number of related administrative back office functions, such as record-keeping and reconciliations.
My Approach Going Forward
This is obviously a well run company and it has a great history having been split out from Automatic Data Processing. This kind of pedigree bodes well for the DNA of the company. It also has a history of increasing it's dividend and this year it has increased it dividend by an additional ten percent. This year will also be the tenth consequitive year that the company has increased its dividend. That kind of steady dividend growth will quickly bring out the dividend growth investors.
Ultimately it has to be realized that while this is a great company, it's stock price is also slightly expensive. Not overly so, but it's not on sale either. The P/E of 26 will scare off some investors, but the company's increasing earnings will quickly push that P/E ratio down. A pullback in the price would also the same thing.
So my approach will be to try to buy these shares for a price close to $60 per share. That may or may not happen but it's the price I'd like to pay for these shares. If I'm not able to get that price in the next few weeks, I'll go ahead and buy these shares at prices anywhere up to $65 per share. Once I get a toe-hold, I'll add to these shares through dividend reinvestment, the sale of call options, and the buying of additional shares on the open market as price determines.