Last update on 2024-06-06

Broadridge Financial Solutions (BR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

In-depth 2023 analysis of Broadridge Financial Solutions (BR) using the Piotroski F-Score that evaluates financial health, profitability, liquidity, and leverage.

Short Analysis - Piotroski Score: 7

We're running Broadridge Financial Solutions (BR) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

In the Piotroski F-Score analysis for Broadridge Financial Solutions (BR), the company scored a strong 7 out of 9. This indicates a solid financial standing. Key findings include: a positive net income of $630.6 million and positive cash flow from operations at $823.3 million in 2023, increasing Return on Assets (ROA), and strong operational efficiency as evidenced by the Operating Cash Flow being higher than net income.

Insights for Value Investors Seeking Stable Income

Broadridge Financial Solutions (BR) shows good potential as a sturdy investment based on its high Piotroski F-Score. The company illustrates consistent profitability, robust cash flow, and improved asset efficiency. However, potential investors should note the decline in the Current Ratio and marginal increase in outstanding shares. Overall, it’s worth considering for further evaluation.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Broadridge Financial Solutions (BR)

Company has a positive net income?

Net income is a measure of profitability. A positive net income indicates the company made a profit, while a negative net income indicates a loss.

For Broadridge Financial Solutions (BR), the net income for 2023 is $630.6 million, which is positive. This is a substantial increase from previous years, showing a positive growth trend. Since the net income is positive, this criterion earns a score of 1 point under the Piotroski analysis. Evaluating the trend from 2006 to 2023, the net income has shown consistent growth over the years, barring a few fluctuations. Notably, the net income increased from $166.7 million in 2006 to $630.6 million in 2023, more than tripling over this period. This positive growth underlines the company's profitability and operational efficiency.

Company has a positive cash flow?

The criterion requires checking the Cash Flow from Operations (CFO) for Broadridge Financial Solutions in 2023.

In 2023, Broadridge Financial Solutions (BR) reported a Cash Flow from Operations (CFO) of $823,300,000, which is positive. According to the Piotroski F-Score, a positive CFO adds 1 point. Over the past 20 years, BR has consistently demonstrated an upward trend in its CFO, significantly increasing from $426,100,000 in 2006 to $823,300,000 in 2023. This upward trajectory indicates strong operational efficiency and robust cash generation, making this trend very favorable for investors.

Return on Assets (ROA) are growing?

Change in ROA examines the year-over-year improvement in a company's Return on Assets. An increase is indicative of better efficiency in utilizing assets to generate earnings.

For Broadridge Financial Solutions (BR), the ROA improved from 0.0662 in 2022 to 0.0769 in 2023. This 14.77% year-over-year increase highlights an improvement in the company's efficiency in generating profits from its assets and adds 1 point to the Piotroski Score. However, when compared with the industry median ROA, Broadridge still lags considerably behind, as the industry median ROA for 2023 is 0.3391. This indicates while the company is improving, it still has a long way to go to meet industry standards.

Operating Cashflow are higher than Netincome?

Operating Cash Flow (OCF) being higher than Net Income (NI) suggests that a company is generating strong cash from its operations relative to its accounting profits. This criterion is crucial as it indicates solid core business operations and reduces the need for external funding.

For Broadridge Financial Solutions (BR) in 2023, the Operating Cash Flow (OCF) stands at $823.3 million, which is significantly higher than the Net Income (NI) of $630.6 million. This difference of approximately $192.7 million underscores BR's robust cash-generating capacity from its core business operations, beyond what is reflected in its accounting profits. Analyzing the historical data over the last 20 years shows fluctuations in cash flows with a noticeable peak in 2023. This trend is favorable for BR, suggesting financial strength and operational efficiency. Consequently, based on the Piotroski Score, BR earns 1 point for this criterion.

Liquidity of Broadridge Financial Solutions (BR)

Leverage is declining?

Change in leverage refers to the variation in the company's usage of debt in its capital structure over time. It's crucial as it impacts financial risk.

Between 2022 and 2023, Broadridge Financial Solutions (BR) exhibited a notable decrease in leverage, from 0.4922 to 0.2955. This reduction indicates a marked improvement in the company's financial structure, as lower leverage typically translates to lower financial risk. The historical data highlights that BR's leverage in 2023 is at one of its lowest points in the past 20 years, second only to a few select years. As decreased leverage signifies less dependency on debt financing, this trend is positive and merits adding a full point for BR in this Piotroski analysis criterion.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover its short-term obligations with its short-term assets. A higher ratio generally indicates better liquidity.

In 2023, Broadridge Financial Solutions (BR) reported a Current Ratio of 0.5807, which is a decline from 1.0115 in 2022. This represents a significant decrease and falls well below the industry median current ratio of 1.4169 in 2023. Given this substantial reduction, the Current Ratio has decreased in 2023, warranting a score of 0 on this criterion. Examining a broader historical context, this ratio has not only declined year-over-year but has also dropped consistently from a peak of 2.0403 in 2010.

Number of shares not diluted?

Change in Shares Outstanding involves analyzing the number of shares issued by the company compared to the previous year.

Broadridge Financial Solutions (BR) saw its outstanding shares rise from 116.7 million in 2022 to 117.7 million in 2023. This indicates a dilution of shareholder value, which is typically viewed unfavorably by investors. Over the last 20 years, there has generally been a reduction in shares outstanding, which is usually a positive development as it often signifies stock buybacks or more strategic capital allocation. However, this year's increase does add a point to scrutiny.

Operating of Broadridge Financial Solutions (BR)

Cross Margin is growing?

Change in Gross Margin: This criterion assesses whether a company’s gross margin has increased from the previous year.

The Gross Margin for Broadridge Financial Solutions (BR) for the year 2023 stands at 0.2946, an increase from the 0.2789 recorded in 2022. This upward trend is favorable, meriting an additional point in Piotroski's F-Score evaluation. Historical data spanning from 2006 to 2023 shows fluctuations in gross margins, with a peak of 0.3214 in 2015 and a trough of 0.2494 in 2017. Compared to its industry median, which saw Gross Margins of 0.3226 in 2022 and 0.3391 in 2023, Broadridge's Gross Margin is lower but has shown commendable improvement. However, keeping pace with industry standards remains a challenge.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales. It is calculated as revenue divided by total assets.

The Asset Turnover ratio for Broadridge Financial Solutions (BR) has increased to 0.739 in 2023 from 0.701 in 2022. This increment indicates an improvement in the company’s efficiency in utilizing its assets to generate revenue. Over the past two decades, the company’s Asset Turnover ratios have demonstrated variability, peaking at 1.3741 in 2017 and experiencing a significant decline to 0.7677 in 2021. Most recently, however, the ratio has shown an upward trend since 2022. Considering the increase from 0.701 to 0.739, we would add 1 point in the Piotroski analysis for BR as this denotes positive momentum in asset efficiency.