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What Lies in Store for Broadridge (BR) in Q3 Earnings?

Broadridge Financial Solutions Inc. BR is set to report third-quarter fiscal 2016 results on May 5. Last quarter, the company posted a positive earnings surprise of 15.2%. Let’s see how things are shaping up for this announcement.

Factors to Consider

Broadridge reported better-than-expected second-quarter results. Also, year-over-year comparisons on both the counts were favorable driven by higher recurring revenues, contribution from Net New Business and acquisition-related synergies.

We remain optimistic about Broadridge’s strategic acquisitions, product launches, share repurchase program and dividend paying initiatives. We also believe that the company’s close association with Accenture ACN will be beneficial over the long term. However, competition from DST Systems Inc. and pricing pressure remain headwinds.

Earnings Whispers

Our proven model does not conclusively show that Broadridge is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 49 cents. Hence, the difference is 0.00%.

Zacks Rank: Broadridge holds a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, a 0.00% ESP makes surprise prediction difficult.

Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies, which are worth considering as our model shows that they have the right combination of the two elements needed to post an earnings beat:

Synopsys Inc. SNPS, with an Earnings ESP of +6.38% and a Zacks Rank #1

Fitbit Inc. FIT, with an Earnings ESP of +175.00% and a Zacks Rank #2

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SYNOPSYS INC (SNPS): Free Stock Analysis Report
 
ACCENTURE PLC (ACN): Free Stock Analysis Report
 
BROADRIDGE FINL (BR): Free Stock Analysis Report
 
FITBIT INC (FIT): Free Stock Analysis Report
 
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