BR Stock Study (11-28-25)

Posted by Mark on May 8, 2025 at 06:37 | Last modified: November 27, 2025 10:02

I recently did a stock study on Broadridge Financial (BR, $227.59).

M* writes:

     > Broadridge Financial Solutions, which was spun off from
     > Automatic Data Processing in 2007, is a leading provider
     > of investor communication and technology-driven solutions
     > to banks, broker/dealers, traditional and alternative-asset
     > managers, wealth managers, and corporate issuers. Broadridge
     > is composed of two operating segments: investor communication
     > solutions and global technology and operations.

Over the past decade, this medium-size company has grown sales and earnings at annualized rates of 8.6% and 11.0%, respectively (FY ends Jun 30). Lines are mostly up, straight, and parallel except for EPS dips in ’20 and ’22. Value Line (VL) gives an Earnings Predictability score of 100.

Over the past decade, PTPM leads peer and industry averages while ranging from 11.8% (’17 and ’22) to 39.9% (in ’24) with a last-5-year mean of 37.3%. ROE also leads peer and industry averages while ranging from 29.3% in ’22 to 37.8% in ’20 with a last-5-year mean of 31.9%. Debt-to-Equity is greater than peer and industry averages while increasing from 49.4% (’16) to 56.6% (’25) with a last-5-year mean of 63.7%.

Quick Ratio is 0.80 and Interest Coverage 10 (13) per M* (VL) who assigns “Wide” Economic Moat, gives “Standard” rating for Capital Allocation, and an A grade for Financial Health (BI website). VL gives a B++ Financial Strength rating.

With regard to sales growth:

• YF gives YOY ACE 5.5% and 4.9% for ’26 and ’27, respectively (based on 9 analysts).
• Zacks gives YOY ACE 5.2% and 4.6% for ’26 and ’27, respectively (4 analysts).
• VL projects 4.6% annualized growth from ’25-’29.
• CFRA projects 6.3% YOY and 5.7% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year annualized ACE of 5.5% and projects 5.9%/year from ’25-’30 (Equity Report).

My 4.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 9.8% and 10.0%/year for ’25-’27 and ’25-’28, respectively (based on 11 analysts).
• Nasdaq.com gives ACE 8.7% YOY and 8.8%/year for ’27 and ’26-’28 (4 analysts each for ’26, ’27, and ’28).
• Seeking Alpha projects 4-year annualized growth of 8.0%.
• Finviz gives ACE 5-year annualized growth of 9.7% (3).
• YF gives YOY ACE 10.5% and 8.7% for ’26 and ’27, respectively (9).
• Zacks gives YOY ACE 9.7% and 8.7% for ’26 and ’27, respectively (4).
• VL projects 9.5% annualized growth from ’25-’29.
• CFRA projects 11.0% YOY and 9.4% per year for ’26 and ’25-’27 along with a 3-year CAGR of 10.0%.
• M* gives long-term annualized ACE of 13.3% and projects 13.3%/year from ’25-’30 (Equity Report).

My 7.0% forecast is below the long-term-estimate range (mean of four: 10.1%; M* only included once as I’d expect its analyst estimate and ACE to differ). Initial value is ’25 EPS of $7.10/share rather than 2026 Q1 EPS of $7.81 (TTM).

My Forecast High P/E is 28.0. Over the past 10 years, high P/E increases from 26.1 (’16) to 34.8 (’25) with a last-5-year mean of 36.4 and a last-5-year-mean average P/E of 31.8. I am near bottom of the range (only ’16 is less).

My Forecast Low P/E is 20.0. Over the past 10 years, low P/E increases from 19.2 (’16) to 27.7 (’25) with a last-5-year mean of 27.2. I am forecasting near bottom of the range (only ’16 is less).

My Low Stock Price Forecast (LSPF) is $158.00. Default ($142.00) based on initial value seems unreasonably low at 37.6% and 33.1% less than the previous close and 52-week low. My [arbitrary] selection is 30.6% and 25.6% less, respectively.

Over the past 10 years, Payout Ratio (PR) ranges from 41.0% in ’18 to 56.3% in ’22 with a last-5-year mean of 52.9%. I am forecasting below the range at 40.0%.

These inputs land BR in the HOLD zone with a U/D ratio of 0.7. Total Annualized Return (TAR) is 5.5%.

PAR (using Forecast Average—not High—P/E) of 2.6% is less than the current risk-free rate (T-bills). If a healthy margin of safety (MOS) anchors this study, then I can focus on TAR albeit still less than I seek in a medium-size company.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only 21 studies done in the past 90 days (12 outliers including my study excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 5.5%, 11.3%, 34.4, 26.2, and 52.9%. I am lower across the board. VL projects a future average annual P/E of 24.0: less than MS (30.3) and equal to mine [M* is a head-scratcher at 15.7].

MS high / low EPS are $12.62 / $7.09 versus my $9.96 / $7.10 (per share). My high EPS is less due to a lower growth rate. VL’s $12.30 high EPS is in the middle while M* $13.23 (lower of regular and adjusted) is highest.

MS LSPF of $188.80 implies a Forecast Low P/E of 26.6 versus the above-stated 26.2. MS LSPF is 1.6% greater than the default $7.09/share * 26.2 = $185.76, which results in more aggressive zoning. MS LSPF is also 19.5% greater than mine.

MOS is robust in the study because my inputs are near or below historical/analyst averages/ranges [head-scratcher aside]. Also backing this assessment are MS TAR exceeding mine by 9.5% per year and my significantly lower LSPF.

With regard to [the conflicting realm of] valuation, PEG is 2.1 and 3.9 per M* and my projected P/E: overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is slightly low at 0.92. “Quick and dirty DCF” says overvalued by 28%, CFRA says overvalued by 9% (with a 4-star stock rating), and M* says undervalued by 21% (with a 5-star stock rating).

Per U/D, BR is a BUY under $188/share. BI TAR criterion would be met [278.9 / ((13.47 / 100 ) +1 ) ^ 5] ~ $148 given a forecast high price ~$279.

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