Intrinsic value of Broadridge Financial Solutions - BR

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$76.21

  Intrinsic Value

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  Value-price divergence*

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$76.21

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 8.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  7.54
  39.70
  36.23
  33.11
  30.30
  27.77
  25.49
  23.44
  21.60
  19.94
  18.44
  17.10
  15.89
  14.80
  13.82
  12.94
  12.14
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
Revenue, $m
  2,897
  4,047
  5,513
  7,339
  9,562
  12,217
  15,331
  18,925
  23,012
  27,600
  32,691
  38,281
  44,363
  50,929
  57,967
  65,467
  73,418
  81,810
  90,634
  99,887
  109,563
  119,663
  130,190
  141,148
  152,547
  164,396
  176,712
  189,509
  202,808
  216,632
  231,004
Variable operating expenses, $m
 
  3,307
  4,469
  5,916
  7,678
  9,782
  12,250
  15,098
  18,337
  21,974
  26,008
  30,338
  35,158
  40,362
  45,940
  51,884
  58,185
  64,835
  71,829
  79,162
  86,831
  94,835
  103,178
  111,862
  120,896
  130,287
  140,047
  150,189
  160,729
  171,684
  183,074
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  2,397
  3,307
  4,469
  5,916
  7,678
  9,782
  12,250
  15,098
  18,337
  21,974
  26,008
  30,338
  35,158
  40,362
  45,940
  51,884
  58,185
  64,835
  71,829
  79,162
  86,831
  94,835
  103,178
  111,862
  120,896
  130,287
  140,047
  150,189
  160,729
  171,684
  183,074
Operating income, $m
  500
  740
  1,044
  1,423
  1,884
  2,435
  3,081
  3,827
  4,675
  5,627
  6,683
  7,943
  9,205
  10,567
  12,027
  13,583
  15,233
  16,974
  18,805
  20,725
  22,733
  24,828
  27,012
  29,286
  31,651
  34,110
  36,665
  39,320
  42,079
  44,948
  47,930
EBITDA, $m
  580
  862
  1,175
  1,564
  2,038
  2,603
  3,267
  4,033
  4,904
  5,882
  6,966
  8,157
  9,454
  10,853
  12,353
  13,951
  15,645
  17,433
  19,314
  21,286
  23,348
  25,500
  27,743
  30,078
  32,507
  35,032
  37,657
  40,384
  43,218
  46,164
  49,226
Interest expense (income), $m
  27
  31
  55
  85
  122
  168
  223
  287
  360
  444
  539
  643
  758
  883
  1,018
  1,162
  1,317
  1,480
  1,652
  1,834
  2,024
  2,222
  2,430
  2,646
  2,871
  3,106
  3,349
  3,602
  3,865
  4,138
  4,422
Earnings before tax, $m
  469
  709
  989
  1,338
  1,762
  2,267
  2,858
  3,540
  4,314
  5,182
  6,144
  7,299
  8,447
  9,684
  11,009
  12,421
  13,916
  15,494
  17,153
  18,891
  20,709
  22,606
  24,582
  26,640
  28,780
  31,004
  33,316
  35,718
  38,215
  40,809
  43,508
Tax expense, $m
  161
  191
  267
  361
  476
  612
  772
  956
  1,165
  1,399
  1,659
  1,971
  2,281
  2,615
  2,973
  3,354
  3,757
  4,183
  4,631
  5,101
  5,591
  6,104
  6,637
  7,193
  7,770
  8,371
  8,995
  9,644
  10,318
  11,019
  11,747
Net income, $m
  308
  517
  722
  977
  1,286
  1,655
  2,087
  2,584
  3,149
  3,783
  4,485
  5,329
  6,166
  7,069
  8,037
  9,067
  10,159
  11,311
  12,522
  13,791
  15,118
  16,502
  17,945
  19,447
  21,009
  22,633
  24,321
  26,074
  27,897
  29,791
  31,760

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  728
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,873
  2,996
  4,081
  5,432
  7,078
  9,043
  11,348
  14,008
  17,034
  20,430
  24,197
  28,335
  32,837
  37,697
  42,907
  48,458
  54,343
  60,555
  67,087
  73,935
  81,098
  88,574
  96,366
  104,477
  112,914
  121,685
  130,801
  140,273
  150,117
  160,349
  170,987
Adjusted assets (=assets-cash), $m
  2,145
  2,996
  4,081
  5,432
  7,078
  9,043
  11,348
  14,008
  17,034
  20,430
  24,197
  28,335
  32,837
  37,697
  42,907
  48,458
  54,343
  60,555
  67,087
  73,935
  81,098
  88,574
  96,366
  104,477
  112,914
  121,685
  130,801
  140,273
  150,117
  160,349
  170,987
Revenue / Adjusted assets
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
  1.351
Average production assets, $m
  252
  352
  480
  638
  832
  1,063
  1,334
  1,646
  2,002
  2,401
  2,844
  3,330
  3,860
  4,431
  5,043
  5,696
  6,387
  7,117
  7,885
  8,690
  9,532
  10,411
  11,327
  12,280
  13,272
  14,302
  15,374
  16,487
  17,644
  18,847
  20,097
Working capital, $m
  596
  -8
  -11
  -15
  -19
  -24
  -31
  -38
  -46
  -55
  -65
  -77
  -89
  -102
  -116
  -131
  -147
  -164
  -181
  -200
  -219
  -239
  -260
  -282
  -305
  -329
  -353
  -379
  -406
  -433
  -462
Total debt, $m
  1,016
  1,565
  2,425
  3,497
  4,802
  6,360
  8,188
  10,297
  12,697
  15,390
  18,378
  21,659
  25,229
  29,083
  33,214
  37,617
  42,283
  47,209
  52,389
  57,820
  63,500
  69,428
  75,607
  82,039
  88,730
  95,685
  102,914
  110,426
  118,232
  126,346
  134,782
Total liabilities, $m
  1,827
  2,376
  3,236
  4,308
  5,613
  7,171
  8,999
  11,108
  13,508
  16,201
  19,189
  22,470
  26,040
  29,894
  34,025
  38,428
  43,094
  48,020
  53,200
  58,631
  64,311
  70,239
  76,418
  82,850
  89,541
  96,496
  103,725
  111,237
  119,043
  127,157
  135,593
Total equity, $m
  1,046
  620
  845
  1,124
  1,465
  1,872
  2,349
  2,900
  3,526
  4,229
  5,009
  5,865
  6,797
  7,803
  8,882
  10,031
  11,249
  12,535
  13,887
  15,305
  16,787
  18,335
  19,948
  21,627
  23,373
  25,189
  27,076
  29,037
  31,074
  33,192
  35,394
Total liabilities and equity, $m
  2,873
  2,996
  4,081
  5,432
  7,078
  9,043
  11,348
  14,008
  17,034
  20,430
  24,198
  28,335
  32,837
  37,697
  42,907
  48,459
  54,343
  60,555
  67,087
  73,936
  81,098
  88,574
  96,366
  104,477
  112,914
  121,685
  130,801
  140,274
  150,117
  160,349
  170,987
Debt-to-equity ratio
  0.971
  2.520
  2.870
  3.110
  3.280
  3.400
  3.490
  3.550
  3.600
  3.640
  3.670
  3.690
  3.710
  3.730
  3.740
  3.750
  3.760
  3.770
  3.770
  3.780
  3.780
  3.790
  3.790
  3.790
  3.800
  3.800
  3.800
  3.800
  3.800
  3.810
  3.810
Adjusted equity ratio
  0.148
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  308
  517
  722
  977
  1,286
  1,655
  2,087
  2,584
  3,149
  3,783
  4,485
  5,329
  6,166
  7,069
  8,037
  9,067
  10,159
  11,311
  12,522
  13,791
  15,118
  16,502
  17,945
  19,447
  21,009
  22,633
  24,321
  26,074
  27,897
  29,791
  31,760
Depreciation, amort., depletion, $m
  80
  123
  131
  141
  154
  168
  186
  206
  229
  255
  283
  215
  249
  286
  325
  367
  412
  459
  509
  561
  615
  672
  731
  792
  856
  923
  992
  1,064
  1,138
  1,216
  1,297
Funds from operations, $m
  446
  640
  853
  1,118
  1,440
  1,823
  2,273
  2,790
  3,379
  4,038
  4,769
  5,543
  6,415
  7,355
  8,362
  9,435
  10,571
  11,770
  13,030
  14,351
  15,732
  17,174
  18,676
  20,239
  21,865
  23,556
  25,312
  27,138
  29,035
  31,007
  33,057
Change in working capital, $m
  8
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
Cash from operations, $m
  438
  601
  856
  1,121
  1,444
  1,829
  2,279
  2,798
  3,387
  4,047
  4,779
  5,555
  6,427
  7,368
  8,376
  9,450
  10,587
  11,787
  13,048
  14,370
  15,752
  17,194
  18,697
  20,261
  21,888
  23,579
  25,337
  27,163
  29,062
  31,035
  33,086
Maintenance CAPEX, $m
  0
  -16
  -23
  -31
  -41
  -54
  -69
  -86
  -106
  -129
  -155
  -183
  -215
  -249
  -286
  -325
  -367
  -412
  -459
  -509
  -561
  -615
  -672
  -731
  -792
  -856
  -923
  -992
  -1,064
  -1,138
  -1,216
New CAPEX, $m
  -76
  -101
  -128
  -159
  -193
  -231
  -271
  -313
  -356
  -399
  -443
  -486
  -529
  -571
  -612
  -652
  -692
  -730
  -768
  -805
  -842
  -879
  -916
  -953
  -992
  -1,031
  -1,071
  -1,113
  -1,157
  -1,203
  -1,250
Cash from investing activities, $m
  -137
  -117
  -151
  -190
  -234
  -285
  -340
  -399
  -462
  -528
  -598
  -669
  -744
  -820
  -898
  -977
  -1,059
  -1,142
  -1,227
  -1,314
  -1,403
  -1,494
  -1,588
  -1,684
  -1,784
  -1,887
  -1,994
  -2,105
  -2,221
  -2,341
  -2,466
Free cash flow, $m
  301
  484
  706
  932
  1,209
  1,544
  1,939
  2,399
  2,925
  3,519
  4,181
  4,885
  5,683
  6,548
  7,478
  8,472
  9,528
  10,645
  11,821
  13,056
  14,349
  15,700
  17,109
  18,577
  20,104
  21,692
  23,343
  25,058
  26,841
  28,694
  30,620
Issuance/(repayment) of debt, $m
  333
  674
  861
  1,071
  1,305
  1,558
  1,828
  2,109
  2,399
  2,693
  2,988
  3,281
  3,570
  3,854
  4,131
  4,402
  4,667
  4,926
  5,180
  5,431
  5,680
  5,929
  6,179
  6,432
  6,691
  6,955
  7,229
  7,512
  7,806
  8,114
  8,436
Issuance/(repurchase) of shares, $m
  -95
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  247
  674
  861
  1,071
  1,305
  1,558
  1,828
  2,109
  2,399
  2,693
  2,988
  3,281
  3,570
  3,854
  4,131
  4,402
  4,667
  4,926
  5,180
  5,431
  5,680
  5,929
  6,179
  6,432
  6,691
  6,955
  7,229
  7,512
  7,806
  8,114
  8,436
Total cash flow (excl. dividends), $m
  542
  1,157
  1,566
  2,003
  2,514
  3,102
  3,767
  4,508
  5,324
  6,212
  7,169
  8,166
  9,253
  10,402
  11,610
  12,874
  14,195
  15,570
  17,001
  18,487
  20,029
  21,629
  23,288
  25,009
  26,795
  28,648
  30,572
  32,570
  34,647
  36,808
  39,056
Retained Cash Flow (-), $m
  -118
  -177
  -225
  -280
  -341
  -407
  -477
  -551
  -626
  -703
  -780
  -856
  -932
  -1,006
  -1,078
  -1,149
  -1,218
  -1,286
  -1,352
  -1,418
  -1,483
  -1,548
  -1,613
  -1,679
  -1,746
  -1,816
  -1,887
  -1,961
  -2,038
  -2,118
  -2,202
Prev. year cash balance distribution, $m
 
  603
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,583
  1,342
  1,723
  2,174
  2,696
  3,290
  3,958
  4,698
  5,509
  6,389
  7,309
  8,321
  9,396
  10,531
  11,725
  12,976
  14,285
  15,649
  17,069
  18,547
  20,081
  21,675
  23,330
  25,048
  26,832
  28,685
  30,609
  32,609
  34,689
  36,854
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  1,518
  1,228
  1,500
  1,790
  2,089
  2,388
  2,674
  2,936
  3,165
  3,350
  3,471
  3,551
  3,573
  3,535
  3,442
  3,298
  3,108
  2,882
  2,628
  2,357
  2,077
  1,798
  1,529
  1,276
  1,044
  837
  657
  505
  379
  277
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Broadridge Financial Solutions, Inc. provides investor communications and technology-driven solutions for the financial services industry in the United States, Canada, the United Kingdom, and internationally. The company’s Investor Communication Solutions segment processes and distributes proxy materials to investors in equity securities and mutual funds, as well as facilitates related vote processing services; and provides ProxyEdge, an electronic proxy delivery and voting solution. This segment also distributes regulatory reports and corporate action/reorganization event information, as well as tax reporting solutions. In addition, it offers financial information distribution and transaction reporting services, such as processing and distribution of account statements and trade confirmations, traditional and personalized document fulfillment and content management services, and marketing communications, as well as imaging, archival, and workflow solutions; and registered proxy, registrar, stock transfer, and record-keeping services. Further, this segment provides cloud-based marketing and customer communication tools; customer and account data aggregation and reporting services; mutual fund and retirement solutions, such as data-driven technology solutions; and mutual fund trade processing services. The company’s Global Technology and Operations segment provides advanced computerized real-time transaction processing services that automate the securities transaction comprising desktop productivity tools, data aggregation, performance reporting, portfolio management, order capture and execution, trade confirmation, settlement, reference data, reconciliations, and accounting; multi-currency solutions to support real-time global trading; and managed services solutions that allow broker-dealers to outsource administrative functions relating to clearing and settlement, and asset servicing. The company was founded in 1962 and is headquartered in Lake Success, New York.

FINANCIAL RATIOS  of  Broadridge Financial Solutions (BR)

Valuation Ratios
P/E Ratio 29.3
Price to Sales 3.1
Price to Book 8.6
Price to Tangible Book
Price to Cash Flow 20.6
Price to Free Cash Flow 24.9
Growth Rates
Sales Growth Rate 7.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 15.2%
Cap. Spend. - 3 Yr. Gr. Rate 8.3%
Financial Strength
Quick Ratio 6
Current Ratio 0.2
LT Debt to Equity 85.2%
Total Debt to Equity 97.1%
Interest Coverage 18
Management Effectiveness
Return On Assets 12.4%
Ret/ On Assets - 3 Yr. Avg. 12.9%
Return On Total Capital 16.7%
Ret/ On T. Cap. - 3 Yr. Avg. 17.9%
Return On Equity 31.2%
Return On Equity - 3 Yr. Avg. 30.4%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 31.8%
Gross Margin - 3 Yr. Avg. 31.7%
EBITDA Margin 19.9%
EBITDA Margin - 3 Yr. Avg. 20%
Operating Margin 17.3%
Oper. Margin - 3 Yr. Avg. 17%
Pre-Tax Margin 16.2%
Pre-Tax Margin - 3 Yr. Avg. 16%
Net Profit Margin 10.6%
Net Profit Margin - 3 Yr. Avg. 10.5%
Effective Tax Rate 34.3%
Eff/ Tax Rate - 3 Yr. Avg. 34.2%
Payout Ratio 44.8%

BR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BR stock intrinsic value calculation we used $2897 million for the last fiscal year's total revenue generated by Broadridge Financial Solutions. The default revenue input number comes from 2016 income statement of Broadridge Financial Solutions. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BR stock valuation model: a) initial revenue growth rate of 39.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for BR is calculated based on our internal credit rating of Broadridge Financial Solutions, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Broadridge Financial Solutions.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BR stock the variable cost ratio is equal to 82.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Broadridge Financial Solutions.

Corporate tax rate of 27% is the nominal tax rate for Broadridge Financial Solutions. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BR are equal to 8.7%.

Life of production assets of 15.5 years is the average useful life of capital assets used in Broadridge Financial Solutions operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BR is equal to -0.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1046 million for Broadridge Financial Solutions - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 117.422 million for Broadridge Financial Solutions is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Broadridge Financial Solutions at the current share price and the inputted number of shares is $8.9 billion.


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COMPANY NEWS

▶ Broadridge Forms Strategic Alliance with Spence Johnson   [Jun-12-17 02:00AM  PR Newswire]
▶ Opening Bell, June 1, 2017   [Jun-01-17 09:29AM  CNBC Videos]
▶ Broadridge Financial posts 3Q profit   [May-10-17 08:26AM  Associated Press]
▶ Broadridge Declares Quarterly Dividend of $0.33 Per Share   [May-05-17 11:59AM  GlobeNewswire]
▶ As Dodd-Frank Repeal Looms, Shareholders Gird for Annual Meetings   [Mar-09-17 02:48PM  The Wall Street Journal]
▶ We're Becoming Investing Automatons   [Feb-27-17 04:46PM  at Barrons.com]
▶ Here's How to Find the Best Dividend Stocks   [Feb-15-17 01:06PM  at Motley Fool]
▶ 5 Stocks We'd Buy and Hold for the Next 20 Years   [Nov-21-16 05:24PM  at Motley Fool]
▶ Broadridge Declares Dividend   [03:14PM  GlobeNewswire]
Stock chart of BR Financial statements of BR Annual reports of BR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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