QUOTE AND NEWS
The Economic Times  Dec 6  Comment 
Minister of state Pon Radhakrishnan said that the endeavour is a tribute to BR Ambedkar as the launch coincides with his death anniversary
Forbes  Dec 5  Comment 
Jon Ward does not lack ambition. With a few business administration extension courses under his belt and a truckload of moxie, he set up TLC, a company that remanufactures vintage Toyota Land Cruisers to standards far better than Toyota could have...
Benzinga  Nov 7  Comment 
In a report published Friday, Credit Suisse analyst Georgios Mihalos reiterated a Neutral rating on Broadridge Financial Solutions, Inc. (NYSE: BR), and raised the price target from $41.00 to $45.00. In the report, Credit Suisse noted, “BR...
Mondo Visione  Sep 25  Comment 
Broadridge Financial Solutions, Inc. (NYSE:BR) today announced a new release of its PROactiveTM solution suite for reconciliation and process management, enhancing overall operational efficiency for financial firms globally.  This latest release...
Forbes  Sep 9  Comment 
Looking at the universe of stocks we cover at Dividend Channel, on 9/11/14, Washington Real Estate Investment Trust (NYSE: WRE), First Financial Bankshares, Inc. (NASD: FFIN), and Broadridge Financial Solutions (NYSE: BR) will all trade...
Benzinga  Sep 9  Comment 
In a report published Tuesday, B. Riley & Co. analyst Brett Piira reiterated a Buy rating on Xcerra Corp (NASDAQ: XCRA), and raised the price target from $13.00 to $13.25. In the report, B. Riley & Co. noted, “Yesterday, before the market...
Mondo Visione  Sep 8  Comment 
Broadridge Financial Solutions, Inc. (NYSE:BR), a leading provider of technology-driven solutions for financial firms and corporate issuers globally, and BI-SAM, a leading provider of performance measurement and attribution solutions for the...
The Hindu Business Line  Sep 4  Comment 
Amid the rising chorus of ‘Hindu’ being the cultural identity of all Indians, President Pranab Mukherjee on Thursday quoted BR Ambedkar to underline that “it is wrong for the major...




 
TOP CONTRIBUTORS

Broadridge Financial Solutions (NYSE: BR) provides outsourced record keeping to the financial industry. This system frees companies from the complex requirements set forth by regulatory agencies, such as the SEC, regarding disclosure filings and securities transactions. In addition, the company processes security transactions.

The decline in trading volumes and the reduction in market liquidity associated with the current financial crisis threatens Broadridge’s earnings. Moreover, as the company serves eight of the top 10 broker-dealers, [1] further consolidation in financial services poses a significant risk by decreasing the number of company clients. However, Broadridge stands to benefit from increased compliance revenues (due to more required filings and disclosures) brought on by recent government intervention in the financial markets. [2]

Business Overview

Broadridge offers a complete portfolio of outsourcing services to the financial services industry, including investor communications such as proxy mailing and vote processing, automated security processing, and transaction services. The company’s clients include broker-dealers (companies that trade securities for clients and internal profit), mutual funds, institutional investors, trading companies, and annuity companies.[1]

Spinoff

Previously, Broadridge formed the Brokerage Services division of ADP, a company that specializes in payroll processing. However, on March 29, 2007, Broadridge spun-off from ADP to form a new company. In the spinoff, ADP charged Broadridge with more than $600 million in debt. [3] To address this issue, management has focused on shareholder returns by decreasing the company’s debt and increasing the dividend ratio.[4]

Business & Financial Metrics[5]

In 2009, BR generated a net income of $190.0 million on revenues of $2.21 billion. This represents a 14.9% decrease in net income and a 6.6% increase in revenues from 2008, when the company earned $223.3 million on $2.07 billion in revenue.

Business Segments[6]

Investor Communication Solutions - 75.7% of FY2009 revenues

The Investor Communications Segment processes and distributes proxy materials, documents mandated by the SEC to inform shareholders about important events, to equity owners and mutual funds. These materials are provided in both electronic and paper formats. In addition, Broadridge supplies other regulatory documents, including tax information and important event disclosure documents, as well as account statements and trade records.

Due to the legal necessity and consistent flow of these documents, this segment provides indispensable services. At all stages in the economic cycle, companies file reorganization documents, implement institutional changes, and deal with regulatory agencies. All of these factors positively impact the Investor Communications segment.

Securities Processing Solutions – 24.3% of FY2009 revenues

The Securities Processing segment records, manages, and archives the trading of stocks, options, mutual funds, and fixed income securities.

Key Trends & Forces

Broadridge stands to benefit from increased regulatory scrutiny in the era of government bailouts

As an outsourcing company for the financial services industry, Broadridge deals heavily with regulatory agencies. These agencies dictate the necessary documents, such as proxy materials and notifications of important events, that a publicly trade company must disclose. Since Broadridge handles these documents, the company’s revenues can be significantly altered by fluctuations in regulatory demands.

With the passage of a $700 billion bailout of financial services on October 3rd, 2008, the US government has assumed a new importance in the financial markets. [7] Moreover, European governments seem to be following suit, as the British passed a $850 billion bailout on October 8th, 2008. [8] In the past, increased government involvement has led to greater regulation. For example, after the accounting scandals in 2002 involving Enron and Tyco the government intervened by way of the Sarbanes-Oxley Act. The Act significantly increased regulatory disclosures and compliance costs for public companies. [9] Broadridge stands to gain from the additional documentation and regulatory demands implemented by government agencies.

Broadridge faces a decline in revenues due to decreases in trading volume and low market liquidty

All three of Broadridge’s segments generate transaction processing fees. In addition, interest earned from margin lending also generates substantial revenue. However, when trading volumes are down, share prices are low, and liquidity is non-existent, [10] Broadridge is impacted in the following ways:

  • Reduced one-time revenues from mergers and acquisitions, investor communications, and mutual fund disclosures
  • Less margin lending
  • Lower trading activity and processing fees
  • Increased litigation claims due to failure of buyers and sellers to fulfill contracts
  • Fewer security purchases

Competition

Broadridge competes against firms' in-house capacities (firms deciding to hire personnel in-house rather than outsource financial record keeping) as well as other outsourcing firms. These firms provide sensitive information and services. Due to the importance of these products, outsourcing firms need a long record of trusted service. This leads to lengthy relationships between firms and clients. The following firms compete with Broadridge:

DST Systems

DST competes with Broadridge in information processing and computer software services. DST also provides statement and billing solutions, similar to Broadridge’s investor communications segment.[11]

State Street

State Street offers investment operations outsourcing, recordkeeping, and transfer agency services that directly compete with Broadridge.[12]

Fiserv

Fiserv also competes in the processing of financial transactions.[13]

Fidelity National Information Services

FIS and Broadridge compete in the financial institution processing and outsourcing market.[14]

References

  1. 1.0 1.1 Broadridge 10-K, page 7
  2. Bernanke's Comments on Government Intervention
  3. Broadridge 10-K, page 56
  4. Broadridge 10-K, page 57
  5. BR 2009 10-K pg. 24  
  6. BR 2009 10-K pg. 33  
  7. Bailout Text
  8. Britain Bailout
  9. Company's Sarbox costs
  10. Recession Characteristics
  11. DST 2007 10-K
  12. State Street 2007 10-K
  13. Fiserv 2007 10-K
  14. FIS 2007 10-K
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki