Equifax (NYSE: EFX) and Broadridge Financial Solutions (NYSE:BR) are both large-cap business services companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, institutional ownership, risk and profitability.
Valuation and Earnings
This table compares Equifax and Broadridge Financial Solutions’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Equifax||$3.14 billion||4.20||$488.80 million||$4.42||24.86|
|Broadridge Financial Solutions||$4.14 billion||2.51||$326.80 million||$2.87||31.13|
Equifax has higher revenue, but lower earnings than Broadridge Financial Solutions. Equifax is trading at a lower price-to-earnings ratio than Broadridge Financial Solutions, indicating that it is currently the more affordable of the two stocks.
This table compares Equifax and Broadridge Financial Solutions’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Broadridge Financial Solutions||8.22%||40.17%||12.67%|
Volatility and Risk
Equifax has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, Broadridge Financial Solutions has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500.
Insider and Institutional Ownership
82.6% of Equifax shares are held by institutional investors. Comparatively, 83.3% of Broadridge Financial Solutions shares are held by institutional investors. 1.3% of Equifax shares are held by company insiders. Comparatively, 2.6% of Broadridge Financial Solutions shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Equifax pays an annual dividend of $1.56 per share and has a dividend yield of 1.4%. Broadridge Financial Solutions pays an annual dividend of $1.46 per share and has a dividend yield of 1.6%. Equifax pays out 35.3% of its earnings in the form of a dividend. Broadridge Financial Solutions pays out 50.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Equifax has increased its dividend for 5 consecutive years and Broadridge Financial Solutions has increased its dividend for 9 consecutive years. Broadridge Financial Solutions is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of current ratings for Equifax and Broadridge Financial Solutions, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Broadridge Financial Solutions||0||2||0||0||2.00|
Equifax currently has a consensus price target of $128.07, suggesting a potential upside of 16.53%. Broadridge Financial Solutions has a consensus price target of $85.50, suggesting a potential downside of 4.30%. Given Equifax’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Equifax is more favorable than Broadridge Financial Solutions.
Broadridge Financial Solutions beats Equifax on 9 of the 17 factors compared between the two stocks.
Equifax Company Profile
Equifax Inc. is a global provider of information solutions and human resources business process outsourcing services for businesses, governments and consumers. The Company operates in four segments: U.S. Information Solutions (USIS), International, Workforce Solutions and Global Consumer Solutions. Its products and services are based on databases of consumer and business information derived from various sources, including credit, financial assets, telecommunications and utility payments, employment, income, demographic and marketing data. It uses statistical techniques and software tools to analyze all available data, creating customized insights, decision-making solutions and processing services for its clients. It helps consumers understand, manage and protect their personal information and make more informed financial decisions. The Company also provides information, technology and services to support debt collections and recovery management.
Broadridge Financial Solutions Company Profile
Broadridge Financial Solutions, Inc. (Broadridge) is a provider of investor communications and technology-driven solutions to banks, broker-dealers, mutual funds and corporate issuers. The Company’s segments include Investor Communication Solutions, and Global Technology and Operations. The Company offers Bank/Broker-Dealer Investor Communication Solutions, Customer Communication Solutions, Corporate Issuer Solutions, Advisor Solutions and Mutual Fund and Retirement Solutions through Investor Communication Solutions segment. The Company offers a middle- and back-office securities processing platform for North American and global broker-dealers. Its services include investor and customer communications, securities processing, and data and analytics solutions. The Company delivers a range of solutions that helps its clients serve their retail and institutional customers across the entire investment lifecycle, including pre-trade, trade, and post-trade processing functionality.
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