Broadridge Financial Solutions, Inc. BR has had an impressive run over the past year. The stock has gained 21% compared with the 11% rally of the industry.

BR has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

The company’s earnings for fiscal 2025 and 2026 are expected to improve 10.4% and 9.1% year over year, respectively. Revenues are expected to increase 6.6% in fiscal 2025 and 4.8% in fiscal 2026.

Factors That Augur Well

Fundamental trends like growing demand for data and analytics, mutualization and digitization are likely to help drive sales growth for BR. The company maintains a strong business model with substantial recurring revenue streams, which provides good visibility on its organic revenues in the near to mid-term. Total revenues grew 7.4% in fiscal 2024, following a respective 6%, 14%, and 10% growth in fiscal 2023, 2022, and 2021.

Broadridge's success is largely attributed to its effective implementation of a growth strategy that focuses on governance, capital markets and wealth management. In governance, the company leverages cutting-edge digital communication technologies while enhancing its print and mail services through advanced tech innovations.

In capital markets, Broadridge is expanding its global platform capabilities and employing next-generation solutions to enhance its service offerings. Additionally, in the wealth management sector, the company has developed an all-encompassing wealth management platform known for its superior systems and data integration capabilities.

The 2024 acquisition of AdvisorTarget is expected to expand Broadridge’s capabilities in digital distribution and marketing for asset management and wealth firms, thereby strengthening the company’s market position and driving growth in the digital marketing space. The buyout will bolster the company's suite of tools, combining AdvisorTarget’s advanced marketing automation and analytics technology.

Broadridge's commitment to returning value to shareholders makes it a solid option for investors aiming for long-term wealth accumulation. Over the past few fiscal years, the company has consistently increased its dividend payments, with $368.2 million paid in fiscal 2024, $331.0 million in 2023 and $290.7 million in 2022. Its robust cash flow supports its ability to maintain stable and growing dividends, providing reliable income to shareholders.

Some Risks

Client concentration is a major risk for Broadridge. It primarily serves clients in the financial services industry. In each of its fiscal 2024, 2023, and 2022, the largest single client accounted for roughly 8%, 7%, and 7% of the company's consolidated revenues, respectively.

Broadridge is heavily exposed to the securities industry, including brokerages and asset managers. A material downturn in the market will likely hurt this industry and affect the company’s business.

Zacks Rank and Stocks to Consider

Broadridge currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Limbach Holdings, Inc. LMB and PagSeguro Digital PAGS.

Limbach Holdings sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

LMB has a long-term earnings growth expectation of 12%. It delivered a trailing four-quarter earnings surprise of 42.3%, on average.

PagSeguro Digital flaunts a Zacks Rank of 1 at present.

PAGShas a long-term earnings growth expectation of 13.6%. It delivered a trailing four-quarter earnings surprise of 9.3% on average.

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Broadridge Financial Solutions, Inc. (BR) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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