Broadridge Financial Solutions (NYSE:BR) Will Want To Turn Around Its Return Trends

Simply Wall St.11-25 18:58

There are a few key trends to look for if we want to identify the next multi-bagger. In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns ...

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In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns ...</p>\n\n<a href=\"https://finance.yahoo.com/news/broadridge-financial-solutions-nyse-br-105835958.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1228905540.USD","symbol_name":"NINETY ONE GSF GLOBAL QUALITY DIVIDEND GROWTH \"A\" (USD) INC 2","start_time":0,"source_url":"https://finance.yahoo.com/news/broadridge-financial-solutions-nyse-br-105835958.html","article_id":"2486702044","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/KBUCiHZfz4dSjI0OMNVwSA--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/deae7123c305ae121db80b585a5fb9dd"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2486702044","pubTimestamp":1732532315,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"There are a few key trends to look for if we want to identify the next multi-bagger. 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In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. However, after briefly looking over the numbers, we don't think Broadridge Financial Solutions (NYSE:BR) has the makings of a multi-bagger going forward, but let's have a look at why that may be. \n Understanding Return On Capital Employed (ROCE) \n For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. To calculate this metric for Broadridge Financial Solutions, this is the formula: \n Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) \n0.15 = US$1.1b ÷ (US$8.0b - US$972m) (Based on the trailing twelve months to September 2024).\n So, Broadridge Financial Solutions has an ROCE of 15%.  That's a pretty standard return and it's in line with the industry average of 15%. \n View our latest analysis for Broadridge Financial Solutions \n\n\n\n  NYSE:BR Return on Capital Employed November 25th 2024\n \n\n Above you can see how the current ROCE for Broadridge Financial Solutions compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Broadridge Financial Solutions  for free. \n The Trend Of ROCE \n In terms of Broadridge Financial Solutions' historical ROCE movements, the trend isn't fantastic. Around five years ago the returns on capital were 20%, but since then they've fallen to 15%. On the other hand, the company has been employing more capital without a corresponding improvement in sales in the last year, which could suggest these investments are longer term plays. It may take some time before the company starts to see any change in earnings from these investments. \n On a side note, Broadridge Financial Solutions has done well to pay down its current liabilities to 12% of total assets. That could partly explain why the ROCE has dropped. What's more, this can reduce some aspects of risk to the business because now the company's suppliers or short-term creditors are funding less of its operations. Since the business is basically funding more of its operations with it's own money, you could argue this has made the business less efficient at generating ROCE. \n The Key Takeaway \n To conclude, we've found that Broadridge Financial Solutions is reinvesting in the business, but returns have been falling. Yet to long term shareholders the stock has gifted them an incredible 105% return in the last five years, so the market appears to be rosy about its future. Ultimately, if the underlying trends persist, we wouldn't hold our breath on it being a multi-bagger going forward. \n Like most companies, Broadridge Financial Solutions does come with some risks, and we've found 2 warning signs  that you should be aware of. \n While Broadridge Financial Solutions may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2486702044"}