Broadridge Financial Solutions: A 162% Return and Counting

As an investor, you'd be hard-pressed to find a better five-year run than broadridge financial solutions (NYSE: BR). With a staggering 162% return over the last five years, Broadridge has not only outperformed the broader market but also its competitors. Let's dive into the factors that have contributed to this remarkable performance and explore what the future holds for this financial services powerhouse.



A Strong Foundation in Financial Services

Broadridge Financial Solutions, spun off from automatic data processing in 2007, is a prominent player in the financial services industry. The company operates through two main segments: Investor Communication Solutions (ICS) and Global Technology and Operations (GTO). These segments serve a diverse clientele, including banks, broker/dealers, asset managers, and corporate issuers. Broadridge's comprehensive range of services, from investor communications to technology solutions, has positioned the company as a critical backbone for the capital markets, asset management, and wealth management sectors.

Consistent Growth and Strong Financial Performance

Broadridge's remarkable five-year run can be attributed to several key factors, including:

1. Recurring Revenue Growth: Broadridge has consistently delivered strong recurring revenue growth, driven by organic growth and strategic acquisitions. In fiscal year 2024, recurring revenues grew by 9% to $980 million, driven by organic growth and acquisitions.
2. Earnings Growth: Broadridge's earnings per share (EPS) have also seen impressive growth. In fiscal year 2024, diluted EPS surged by 103% to $1.20, while adjusted EPS grew by 70% to $1.56.
3. Margin Expansion: Broadridge has successfully expanded its margins, reflecting operational efficiency and profitability. In fiscal year 2024, operating income increased by 69% to $211 million, with an operating margin of 13.3%, up from 8.9% in the prior year.
4. Strategic Acquisitions: Broadridge has grown through strategic acquisitions, such as the acquisition of Itiviti Holding AB ("Itiviti") in fiscal year 2022. This acquisition contributed to Broadridge's 16% recurring revenue growth in 2022.
5. Market Leadership: Broadridge's market leadership in investor communications and technology solutions has provided the company with a strong foundation for growth and resilience.



Looking Ahead: A Bright Future for Broadridge

Broadridge's strong financial performance and strategic initiatives have positioned the company well for future growth. The company's reaffirmation of its fiscal 2025 guidance, including 6-8% recurring revenue growth and 8-12% adjusted EPS growth, indicates confidence in its ability to sustain momentum and achieve its long-term objectives.

Moreover, Broadridge's commitment to a balanced approach to capital allocation, including share repurchases and strategic acquisitions, further enhances its prospects for continued success. The company's 12th consecutive double-digit increase in its annual dividend, marking a 10% increase to $3.52 per share, also underscores the strength and resiliency of its business model.

In conclusion, Broadridge Financial Solutions' remarkable 162% return over the last five years is a testament to the company's strong financial performance, strategic initiatives, and market leadership. As the company navigates the evolving market landscape, its robust infrastructure and innovative solutions position it well for future success. Investors looking for a solid, long-term investment in the financial services sector would be wise to consider Broadridge Financial Solutions.