Broadridge Financial Solutions, Inc. (NYSE:BR) missed earnings with its latest first-quarter results, disappointing overly-optimistic analysts. Broadridge Financial Solutions missed analyst estimates, with revenues of US$949m and earnings per share (EPS) of US$0.48, missing by 3.2% and 7.9% respectively. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest forecasts to see whether analysts have changed their mind on Broadridge Financial Solutions after the latest results.
Taking into account the latest results, the most recent consensus for Broadridge Financial Solutions from eight analysts is for revenues of US$4.5b in 2020, which is a modest 4.7% increase on its sales over the past 12 months. Earnings per share are expected to rise 8.6% to US$4.34. Yet prior to the latest earnings, analysts had been forecasting revenues of US$4.6b and earnings per share (EPS) of US$4.42 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$134, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Broadridge Financial Solutions at US$145 per share, while the most bearish prices it at US$116. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether analysts are more or less bullish relative to other companies in the market. It's pretty clear that analysts expect Broadridge Financial Solutions's revenue growth will slow down substantially, with revenues next year expected to grow 4.7%, compared to a historical growth rate of 13% over the past five years. By way of comparison, the 222 other companies in this market with analyst coverage, are forecast to grow their revenue at 10% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts are also expecting Broadridge Financial Solutions to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the plus side, there were no major changes to revenue estimates; although analyst forecasts do imply revenues expected to perform worse than the wider market. The consensus price target held steady at US$134, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Broadridge Financial Solutions analysts - going out to 2024, and you can see them free on our platform here.
You can also see whether Broadridge Financial Solutions is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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