Every Thursday we bring you one of our best U.S. stock picks. You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about, most often from coverage in our newsletter on U.S. investing, Wall Street Stock Forecaster. This week’s U.S. pick comes from our advisory for more aggressive investors, Stock Pickers Digest.
BROADRIDGE FINANCIAL SOLUTIONS (New York symbol BR; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 90% of all proxy votes in the U.S. and Canada.
Broadridge began trading on April 2, 2007, after former parent Automatic Data Processing handed out Broadridge stock to its own investors as a special dividend.
Without one-time items, Broadridge earned $37.0 million, or $0.30 a share, in its fiscal 2015 first quarter, which ended September 30, 2014. That’s down 22.9% from $48.0 million, or $0.39 a share, a year earlier.
The company paid employees higher commissions on new sales and performance bonuses. It also expanded its sales and marketing capabilities.
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Stock market advice: Broadridge shares up 137% since spinoff
Broadridge typically makes about half of its profits in its fiscal fourth-quarter ended June 30. That’s the busiest period for processing proxies and annual reports for its clients.
Two-thirds of the company’s total revenue comes from contracts that pay recurring fees. The remaining third comes from one-time events, such as notifications of special shareholder meetings and distributing information when mutual funds change managers.
Revenue gained 1.9% in the latest quarter, to $555.8 million from $545.2 million. Broadridge expects to earn $2.42 to $2.52 a share in fiscal 2015.
The company’s long-term debt of $524.1 million is a low 9.4% of its market cap, and it holds cash of $331.3 million, or $2.76 a share.
Broadridge stayed in a narrow range between the 2008 financial crisis and 2012, but it jumped in 2013 and is now up 137% since it became a separate firm.
Since April 2014 the stock is up 35% for us, but trades at a reasonable 18.8 times the mid-point of that range.
Broadridge is a buy recommendation of our advisory on more aggressive investing, Stock Pickers Digest.
Tomorrow we look at the challenges of an LNG shipper trying to capture a greater share of the rich Asian market
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