Broadridge Financial Solutions BR stock valuation

#valueinvesting #br #stocks

I i wanted to to see this company that um that you suggested and uh i didn’t know broad ridge financial the numbers that we see here with the ticker br are not updated we’re gonna have to update them live the only price uh the only thing that is updated is the price so it’s currently at 139 dollars per share um so first of all as usual let’s let’s see what these

Guys um do what these guys do so broadridge financial solutions investor communication services technology solution for the financial service industry um so customers in the us canada uk they process and distribute proxy materials regulatory reports sales newsletters trade confirmation account statements etc so okay so this is a financial services company yeah

With the bulk of its customers in the us canada and the uk actually and uh the your market cup if you wanna if you wanna write it in the in the excel sheet is 17 billion dollars okay they’re not so and they’re not too large yeah this is good and maybe let’s let’s see a bunch of of things before we actually start so they have a return on total capital which is

Around i would say twenty percent so in the past was twenty yeah i i read 16 18 18 16 16 24 22 22 12 okay value line is forecasting it to go to 21 again but i guess we can put maybe 18. okay 20. okay okay they have a dividend yield of 1.7 percent right now right now and they have been issuing share a little bit in 2019 20 2020 but for now in the last uh two

Years wow okay they’ve been uh not touching their shares and and in the last like 10 years they that they both died a bit yeah yeah so okay so that seems pretty stable with that them they have some debt they have four billion dollars in total debt but they also have a short term like uh you know that you in five years of 2.5 so actually half of the debt is due

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In five years they have 300 million dollars in cash and almost 800 million in receivables value line attributes b plus plus to them so it’s not so bad okay they have an operating margin of around 20 percent uh a net profit margin of around 13 so i would say not super strong numbers but pretty stable company yeah and uh regarding the growth in the past if you

Want i can tell you what i what i share what i see here so i see that in the last five years they grew revenue cash flow and earnings per share at 12 16 and 17 in the last 10 years actually they grew them at 9 13 and 13. which is what we are going to put here yeah okay the analysts on value line at least are saying 7 10 and 9. and we are going to follow them

The um current multiple the for the pe is 23 and i guess in the last five years has been more around 25 okay trading view has slightly different numbers but it’s it says 29 uh okay so it it says right now 29 37 3 so i i let’s keep you know the consistency i i don’t think it’s too it’s too different unless they so we said that they didn’t issue many shares

Right that’s correct so 29 37 3 and so in the past okay let’s see well the eps the the the pe in the past was uh 25. okay so 25 17 2.5 so here okay so since now the multiple is a bit higher we are going to compress it okay the cash flow per share actually seems very off this is something that maybe we should look into a little bit more the the multiple the

Current multiple seems with respect to the best with respect to the past and with respect to the other multiples you see this is 25.29 for the earnings per share but for and and revenue per share 2.53 but cash flow per share 1737. yeah so okay let’s let’s look uh on on the data directly on the data okay on value line data so cash flow per share let’s look at

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Let’s say 2017 so in 2017 it was 4.3 dollars per share and the price was between 65 and 92 so let’s say 80 and so let’s say 80 divided by 4.3 it’s 18.6 okay so this cash flow per share seems quite reasonable okay so let’s check the current cash flow per share multiple right now so the price right now is what can you tell me 139 139 and the cash flow is 10.15

10.15 okay so it’s 13.7 okay so there was something it’s a trading view yes so this is 14 okay so at this point let us see all of them so the revenue okay seems legit as you said um earnings per share 6.4 so let us see it’s 21. okay also this is off so maybe maybe i shouldn’t mix things and stay with value line okay so now we have to check those in the

Past revenue per share okay can can i tell you the numbers and and you can calculate uh so if you open the calculator so okay revenue per share so let’s say 80 divided by 35 which is around 2.3 okay so this was 2.3 then let’s say 80 divided by 4.3 okay we we did it already right the cash flow yes okay but the earnings not so 80 divided by 2.7 80 divided by

2.7 is around 30. okay then let’s do 110 divided by 4.2 26 okay so these last two numbers were uh referring to the average price in 20 in in 2018 and the earnings per share in 2018. let’s do another one just once one more um let’s do 60 divided by 2.5 24. 24 okay these numbers were referring to 2016 so okay so it seems that that 20 yeah maybe 23 24 something

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Like this is this the right yeah you can put 24 i mean so i think we have uh good numbers now okay i can look up how much did they grow they did grow uh the dividend in the past 10 years it’s about 14 their dividend yield historically it’s one historically means in the last five years is 1.7 okay and now it is 1.8 so this is very stable they they grew their

Dividend for 15 years so it’s good right yeah it’s very good because this means that this is not the first crisis that they are able to withstand so that they actually were able to so they started to grow the dividend before 2008. okay this this great timing to to start a dividend policy how much will they continue to grow their dividend well let’s say nine

Yeah let’s say probably nine because otherwise it would grow more than the earnings in the future yeah so this would lead us to a dividend uh yield of 2.3 percent yes okay and the return on total capital was 18 now we are forecasting a return of 6.2 so we are on the safe side let’s say um yes and also quite disappointing quite disappointing yeah with such a high

Let’s say or very very good return total capital so i guess this is a pass for now this is a pass definitely i mean this is a case where it seems then of course next week we are going to check the discounted cash flow model but this is the typical case of very good business but it seems too expensive talk plus we are saying that they will slow down yes quite

A bit so if if these two things uh combine there’s no hope for the stock definitely to perform well yeah from from these levels but so yes but this is this is a password now

Transcribed from video
Broadridge Financial Solutions BR stock valuation By Compounding with Guy \u0026 Matt