NEW YORK (TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,900 U.S. traded stocks for potential upgrades or downgrades based on the latest available financial results and trading activity.
TheStreet Ratings released rating changes on 53 U.S. common stocks for week ending July 22, 2011. 33 stocks were upgraded and 20 stocks were downgraded by our stock model.
Rating Change #10
Broadridge Financial Solutions (BR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in net income, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.Highlights from the ratings report include:
- BROADRIDGE FINANCIAL SOLUTNS has improved earnings per share by 13.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, BROADRIDGE FINANCIAL SOLUTNS increased its bottom line by earning $1.62 versus $1.57 in the prior year. For the next year, the market is expecting a contraction of 14.8% in earnings ($1.38 versus $1.62).
- The debt-to-equity ratio is somewhat low, currently at 0.82, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that BR's debt-to-equity ratio is low, the quick ratio, which is currently 0.64, displays a potential problem in covering short-term cash needs.
- The net income growth from the same quarter one year ago has exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 19.3% when compared to the same quarter one year prior, going from $24.90 million to $29.70 million.
- Net operating cash flow has significantly increased by 111.45% to $21.70 million when compared to the same quarter last year. In addition, BROADRIDGE FINANCIAL SOLUTNS has also vastly surpassed the industry average cash flow growth rate of 25.48%.
- BR's revenue growth trails the industry average of 23.6%. Since the same quarter one year prior, revenues slightly increased by 7.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
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