Broadridge Financial Solutions, Inc. BR reported impressive fourth-quarter fiscal 2026 results, with both earnings and revenues beating the Zacks Consensus Estimate.
BR’s adjusted earnings of $3.82 per share topped the Zacks Consensus Estimate of $3.75 by 1.9% and increased 7.6% from the year-ago quarter’s actual.
Total revenues of $2.22 billion surpassed the consensus mark of $2.17 billion by 2.1% and rose 7.5% year over year. Recurring revenues increased 8% to $1.54 billion, while closed sales jumped 39% to $158.3 million.
BR’s shares have declined 40.7% over the past year compared with the industry’s 17.7% decline. The Zacks S&P 500 composite has risen 23.8% over the same time frame.
BR’s Recurring Revenue Momentum
Recurring revenue growth was 8% on both a reported and constant-currency basis. Organic growth contributed 7 percentage points, including 5 points from closed sales, partly offset by a 2-point drag from client losses. Acquisitions added 1 point.
Event-driven revenues declined 10% to $71.1 million, primarily due to lower mutual fund proxy revenues. Distribution revenues advanced 8% to $606.5 million, driven mainly by about $32 million of postage-rate increases.
Broadridge’s ICS Segment Advances
Investor Communication Solutions revenues rose 8% to $1.73 billion. Recurring revenues increased 10% to $1.05 billion, reflecting 6 points of internal growth, 3 points from net new business and 1 point from acquisitions.
Regulatory recurring revenues grew 14%, aided by 14% equity revenue position growth and 7% mutual fund and ETF position growth. Data-driven fund solutions rose 7%, issuer revenues increased 8%, and customer communications gained 1%.
BR’s GTO Profitability Improves
Global Technology and Operations (GTO) recurring revenues increased 5% to $487.5 million. Capital Markets revenues rose 8% to $307.1 million, supported by organic growth and the CQG acquisition. Wealth and Investment Management revenues edged up 1% to $180.5 million.
GTO earnings before income taxes nearly doubled to $67.5 million from $33.9 million. Its pre-tax margin expanded to 13.8% from 7.3%, as higher revenues and lower expenses more than offset the impact of ongoing investments.
Broadridge’s Margins & Earnings Rise
Operating income increased 10% to $546.2 million, while the operating margin expanded 50 basis points to 24.6%. Adjusted operating income rose 7% to $598 million.
The adjusted operating margin slipped 10 basis points to 26.9%. Net earnings increased 6% to $398 million, while adjusted net earnings rose 5% to $442 million. The effective tax rate increased to 23.7% from 20.6% because of lower discrete tax benefits.
BR’s Operating Metrics Stay Firm
Equity position growth was 17% in the quarter, while equity revenue position growth came in at 14%. Mutual fund and ETF position growth was 7%, underscoring solid activity across Broadridge’s governance network.
Internal trade growth was 15%, reflecting higher daily trade volumes among clients whose contracts are linked to activity levels. The metric exceeded the company’s 10-year average of 9%.
Broadridge’s Cash Flow Supports Capital Returns
Broadridge ended fiscal 2026 with cash and cash equivalents of $402.9 million, down from $561.5 million a year earlier. Long-term debt was $3.25 billion compared with $2.75 billion at the end of fiscal 2025.
For fiscal 2026, operating cash flow was $1.35 billion. Free cash flow totaled $1.23 billion, representing 110% conversion of adjusted net earnings. The company returned more than $1 billion to shareholders through dividends and net share repurchases during the year.
BR Sets Fiscal 2027 Targets
For fiscal 2027, Broadridge expects recurring revenue growth of 6-8% on a constant-currency basis. Adjusted operating margin is projected at about 21%, while adjusted earnings per share growth is anticipated in the 8-12% range.
Free cash flow conversion is expected to exceed 100%, and closed sales are projected between $290 million and $330 million. The board approved a 12% increase in the annual dividend to $4.36 per share and authorized a new $1.5 billion share-repurchase program.
Currently, Broadridge carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Snapshots
Trane Technologies plc TT reported impressive second-quarter 2026 results. TT’s adjusted earnings of $4.31 per share outpaced the consensus mark by 0.9% and rose 11.1% from the year-ago quarter’s actual. TT’s total revenues of $6.35 billion surpassed the consensus mark by 2.9% and increased 6.4% year over year.
Rollins, Inc. ROL posted unimpressive second-quarter 2026 results. ROL’s adjusted earnings of 32 cents per share missed the Zacks Consensus Estimate by 5.9% but rose 6.7% year over year. Total revenues of $1.08 billion fell short of the consensus estimate by 1.7% but increased 7.9% from the year-ago quarter.
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Broadridge Financial Solutions, Inc. (BR): Free Stock Analysis Report
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Trane Technologies plc (TT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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