Intrinsic value of Broadridge Financial Solutions - BR

Previous Close

$76.46

  Intrinsic Value

$826.67

stock screener

  Rating & Target

str. buy

+981%

  Value-price divergence*

+568%

Previous close

$76.46

 
Intrinsic value

$826.67

 
Up/down potential

+981%

 
Rating

str. buy

 
Value-price divergence*

+568%

*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 9.0

 

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
  46.40
  42.26
  38.53
  35.18
  32.16
  29.45
  27.00
  24.80
  22.82
  21.04
  19.44
  17.99
  16.69
  15.52
  14.47
  13.52
  12.67
  11.90
  11.21
  10.59
  10.03
  9.53
  9.08
  8.67
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
Revenue, $m
  2,897
  4,241
  6,034
  8,359
  11,299
  14,933
  19,330
  24,550
  30,639
  37,631
  45,548
  54,400
  64,188
  74,903
  86,530
  99,052
  112,448
  126,696
  141,779
  157,678
  174,380
  191,876
  210,161
  229,238
  249,111
  269,793
  291,301
  313,658
  336,892
  361,036
  386,128
Variable operating expenses, $m
 
  3,461
  4,882
  6,724
  9,055
  11,935
  15,420
  19,556
  24,382
  29,923
  36,197
  43,113
  50,870
  59,362
  68,577
  78,500
  89,117
  100,409
  112,362
  124,962
  138,199
  152,065
  166,556
  181,675
  197,424
  213,815
  230,861
  248,579
  266,992
  286,127
  306,013
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
  3,461
  4,882
  6,724
  9,055
  11,935
  15,420
  19,556
  24,382
  29,923
  36,197
  43,113
  50,870
  59,362
  68,577
  78,500
  89,117
  100,409
  112,362
  124,962
  138,199
  152,065
  166,556
  181,675
  197,424
  213,815
  230,861
  248,579
  266,992
  286,127
  306,013
Operating income, $m
  500
  780
  1,152
  1,634
  2,244
  2,998
  3,911
  4,994
  6,257
  7,708
  9,351
  11,287
  13,318
  15,541
  17,954
  20,552
  23,331
  26,287
  29,417
  32,716
  36,181
  39,811
  43,605
  47,563
  51,687
  55,978
  60,440
  65,079
  69,900
  74,909
  80,115
EBITDA, $m
  580
  904
  1,286
  1,781
  2,408
  3,182
  4,119
  5,232
  6,529
  8,019
  9,706
  11,593
  13,678
  15,962
  18,439
  21,108
  23,962
  26,999
  30,213
  33,601
  37,160
  40,888
  44,785
  48,850
  53,085
  57,492
  62,075
  66,840
  71,791
  76,936
  82,283
Interest expense (income), $m
  27
  31
  59
  96
  143
  204
  278
  369
  476
  601
  745
  907
  1,089
  1,290
  1,510
  1,749
  2,007
  2,282
  2,574
  2,884
  3,211
  3,554
  3,914
  4,289
  4,681
  5,089
  5,514
  5,956
  6,415
  6,893
  7,389
Earnings before tax, $m
  469
  749
  1,093
  1,539
  2,101
  2,795
  3,632
  4,625
  5,781
  7,107
  8,606
  10,380
  12,229
  14,251
  16,443
  18,802
  21,325
  24,006
  26,842
  29,831
  32,970
  36,257
  39,692
  43,274
  47,005
  50,888
  54,926
  59,123
  63,484
  68,016
  72,727
Tax expense, $m
  161
  202
  295
  415
  567
  755
  981
  1,249
  1,561
  1,919
  2,324
  2,803
  3,302
  3,848
  4,440
  5,077
  5,758
  6,482
  7,247
  8,054
  8,902
  9,789
  10,717
  11,684
  12,691
  13,740
  14,830
  15,963
  17,141
  18,364
  19,636
Net income, $m
  308
  547
  798
  1,123
  1,534
  2,040
  2,652
  3,376
  4,220
  5,188
  6,282
  7,577
  8,927
  10,403
  12,004
  13,726
  15,567
  17,524
  19,595
  21,777
  24,068
  26,468
  28,975
  31,590
  34,314
  37,148
  40,096
  43,160
  46,344
  49,652
  53,090

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
  3,139
  4,466
  6,187
  8,363
  11,053
  14,308
  18,172
  22,679
  27,854
  33,714
  40,267
  47,512
  55,442
  64,049
  73,317
  83,233
  93,780
  104,944
  116,712
  129,075
  142,025
  155,560
  169,680
  184,390
  199,699
  215,619
  232,167
  249,365
  267,236
  285,809
Adjusted assets (=assets-cash), $m
  2,145
  3,139
  4,466
  6,187
  8,363
  11,053
  14,308
  18,172
  22,679
  27,854
  33,714
  40,267
  47,512
  55,442
  64,049
  73,317
  83,233
  93,780
  104,944
  116,712
  129,075
  142,025
  155,560
  169,680
  184,390
  199,699
  215,619
  232,167
  249,365
  267,236
  285,809
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
  369
  525
  727
  983
  1,299
  1,682
  2,136
  2,666
  3,274
  3,963
  4,733
  5,584
  6,517
  7,528
  8,618
  9,783
  11,023
  12,335
  13,718
  15,171
  16,693
  18,284
  19,944
  21,673
  23,472
  25,343
  27,288
  29,310
  31,410
  33,593
Working capital, $m
  596
  -8
  -12
  -17
  -23
  -30
  -39
  -49
  -61
  -75
  -91
  -109
  -128
  -150
  -173
  -198
  -225
  -253
  -284
  -315
  -349
  -384
  -420
  -458
  -498
  -540
  -583
  -627
  -674
  -722
  -772
Total debt, $m
  1,016
  1,678
  2,731
  4,095
  5,821
  7,954
  10,535
  13,599
  17,173
  21,277
  25,924
  31,121
  36,866
  43,155
  49,980
  57,330
  65,193
  73,556
  82,409
  91,742
  101,545
  111,815
  122,548
  133,745
  145,410
  157,550
  170,175
  183,298
  196,935
  211,107
  225,835
Total liabilities, $m
  1,827
  2,489
  3,542
  4,906
  6,632
  8,765
  11,346
  14,410
  17,984
  22,088
  26,735
  31,932
  37,677
  43,966
  50,791
  58,141
  66,004
  74,367
  83,220
  92,553
  102,356
  112,626
  123,359
  134,556
  146,221
  158,361
  170,986
  184,109
  197,746
  211,918
  226,646
Total equity, $m
  1,046
  650
  924
  1,281
  1,731
  2,288
  2,962
  3,762
  4,694
  5,766
  6,979
  8,335
  9,835
  11,477
  13,258
  15,177
  17,229
  19,412
  21,723
  24,159
  26,718
  29,399
  32,201
  35,124
  38,169
  41,338
  44,633
  48,059
  51,619
  55,318
  59,162
Total liabilities and equity, $m
  2,873
  3,139
  4,466
  6,187
  8,363
  11,053
  14,308
  18,172
  22,678
  27,854
  33,714
  40,267
  47,512
  55,443
  64,049
  73,318
  83,233
  93,779
  104,943
  116,712
  129,074
  142,025
  155,560
  169,680
  184,390
  199,699
  215,619
  232,168
  249,365
  267,236
  285,808
Debt-to-equity ratio
  0.971
  2.580
  2.950
  3.200
  3.360
  3.480
  3.560
  3.620
  3.660
  3.690
  3.710
  3.730
  3.750
  3.760
  3.770
  3.780
  3.780
  3.790
  3.790
  3.800
  3.800
  3.800
  3.810
  3.810
  3.810
  3.810
  3.810
  3.810
  3.820
  3.820
  3.820
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
  547
  798
  1,123
  1,534
  2,040
  2,652
  3,376
  4,220
  5,188
  6,282
  7,577
  8,927
  10,403
  12,004
  13,726
  15,567
  17,524
  19,595
  21,777
  24,068
  26,468
  28,975
  31,590
  34,314
  37,148
  40,096
  43,160
  46,344
  49,652
  53,090
Depreciation, amort., depletion, $m
  80
  124
  134
  147
  163
  184
  208
  238
  272
  311
  356
  305
  360
  420
  486
  556
  631
  711
  796
  885
  979
  1,077
  1,180
  1,287
  1,398
  1,514
  1,635
  1,761
  1,891
  2,026
  2,167
Funds from operations, $m
  446
  670
  932
  1,270
  1,697
  2,224
  2,860
  3,614
  4,492
  5,499
  6,638
  7,883
  9,287
  10,824
  12,489
  14,282
  16,198
  18,235
  20,391
  22,662
  25,047
  27,545
  30,154
  32,877
  35,712
  38,663
  41,731
  44,920
  48,234
  51,678
  55,258
Change in working capital, $m
  8
  -3
  -4
  -5
  -6
  -7
  -9
  -10
  -12
  -14
  -16
  -18
  -20
  -21
  -23
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -46
  -48
  -50
Cash from operations, $m
  438
  673
  935
  1,275
  1,703
  2,231
  2,869
  3,624
  4,504
  5,513
  6,654
  7,900
  9,307
  10,845
  12,512
  14,307
  16,225
  18,264
  20,421
  22,694
  25,080
  27,580
  30,191
  32,915
  35,752
  38,704
  41,774
  44,965
  48,281
  51,727
  55,308
Maintenance CAPEX, $m
  0
  -16
  -24
  -34
  -47
  -63
  -84
  -108
  -138
  -172
  -211
  -256
  -305
  -360
  -420
  -486
  -556
  -631
  -711
  -796
  -885
  -979
  -1,077
  -1,180
  -1,287
  -1,398
  -1,514
  -1,635
  -1,761
  -1,891
  -2,026
New CAPEX, $m
  -76
  -117
  -156
  -202
  -256
  -316
  -383
  -454
  -530
  -608
  -689
  -770
  -852
  -932
  -1,012
  -1,089
  -1,165
  -1,240
  -1,312
  -1,383
  -1,453
  -1,522
  -1,591
  -1,660
  -1,729
  -1,799
  -1,871
  -1,945
  -2,021
  -2,101
  -2,183
Cash from investing activities, $m
  -137
  -133
  -180
  -236
  -303
  -379
  -467
  -562
  -668
  -780
  -900
  -1,026
  -1,157
  -1,292
  -1,432
  -1,575
  -1,721
  -1,871
  -2,023
  -2,179
  -2,338
  -2,501
  -2,668
  -2,840
  -3,016
  -3,197
  -3,385
  -3,580
  -3,782
  -3,992
  -4,209
Free cash flow, $m
  301
  539
  756
  1,039
  1,400
  1,852
  2,403
  3,062
  3,837
  4,733
  5,754
  6,875
  8,150
  9,552
  11,080
  12,732
  14,503
  16,393
  18,398
  20,515
  22,742
  25,079
  27,523
  30,076
  32,736
  35,507
  38,389
  41,385
  44,499
  47,735
  51,098
Issuance/(repayment) of debt, $m
  333
  787
  1,052
  1,365
  1,726
  2,133
  2,581
  3,064
  3,574
  4,104
  4,647
  5,196
  5,745
  6,289
  6,825
  7,350
  7,863
  8,364
  8,853
  9,332
  9,804
  10,270
  10,733
  11,197
  11,665
  12,140
  12,625
  13,123
  13,638
  14,172
  14,728
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
  787
  1,052
  1,365
  1,726
  2,133
  2,581
  3,064
  3,574
  4,104
  4,647
  5,196
  5,745
  6,289
  6,825
  7,350
  7,863
  8,364
  8,853
  9,332
  9,804
  10,270
  10,733
  11,197
  11,665
  12,140
  12,625
  13,123
  13,638
  14,172
  14,728
Total cash flow (excl. dividends), $m
  542
  1,327
  1,808
  2,403
  3,126
  3,985
  4,984
  6,126
  7,411
  8,837
  10,401
  12,071
  13,895
  15,842
  17,905
  20,082
  22,366
  24,757
  27,251
  29,847
  32,546
  35,348
  38,256
  41,273
  44,401
  47,646
  51,013
  54,508
  58,137
  61,907
  65,827
Retained Cash Flow (-), $m
  -118
  -207
  -275
  -356
  -451
  -557
  -674
  -800
  -933
  -1,071
  -1,213
  -1,356
  -1,500
  -1,642
  -1,782
  -1,919
  -2,052
  -2,183
  -2,311
  -2,436
  -2,559
  -2,681
  -2,802
  -2,923
  -3,045
  -3,169
  -3,295
  -3,426
  -3,560
  -3,699
  -3,845
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
 
  1,723
  1,533
  2,047
  2,676
  3,428
  4,310
  5,326
  6,478
  7,766
  9,188
  10,714
  12,395
  14,200
  16,124
  18,163
  20,314
  22,573
  24,940
  27,411
  29,987
  32,668
  35,455
  38,350
  41,356
  44,477
  47,718
  51,082
  54,577
  58,208
  61,982
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
 
  1,652
  1,403
  1,782
  2,203
  2,657
  3,128
  3,598
  4,049
  4,461
  4,817
  5,088
  5,290
  5,399
  5,413
  5,332
  5,162
  4,912
  4,593
  4,220
  3,810
  3,379
  2,942
  2,513
  2,106
  1,730
  1,392
  1,096
  844
  635
  467
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 29.4
Price to Sales 3.1
Price to Book 8.6
Price to Tangible Book
Price to Cash Flow 20.7
Price to Free Cash Flow 25
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 46.4% 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 $9.0 billion.

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COMPANY NEWS

▶ Top Ranked Growth Stocks to Buy for August 17th   [Aug-17-17 09:42AM  Zacks]
▶ Broadridge Financial meets 4Q profit forecasts   [Aug-10-17 11:51PM  Associated Press]
▶ Broadridge Financial meets 4Q profit forecasts   [07:26AM  Associated Press]
▶ Broadridge Appoints Tim Gokey President   [04:30PM  GlobeNewswire]
▶ Bigger Fund Flows Stem From Low-Fee Funds and ETF's   [Aug-01-17 04:01PM  TheStreet.com]
▶ 7 Near-Monopolies That Are Perfectly Legal in America   [Jul-21-17 07:15AM  Motley Fool]
▶ 3 Growth Stocks for Conservative Investors   [Jun-26-17 10:51AM  Motley Fool]
▶ 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]
Stock chart of BR Financial statements 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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