Returns On Capital At Broadridge Financial Solutions (NYSE:BR) Have Stalled

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. This shows us that it’s a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So, when we ran our eye over Broadridge Financial Solutions’ (NYSE:BR) trend of ROCE, we liked what we saw.

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For those who don’t know, ROCE is a measure of a company’s yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Broadridge Financial Solutions:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)

0.18 = US$1.2b ÷ (US$8.3b – US$1.6b) (Based on the trailing twelve months to September 2025).

Therefore, Broadridge Financial Solutions has an ROCE of 18%. That’s a relatively normal return on capital, and it’s around the 16% generated by the Professional Services industry.

Check out our latest analysis for Broadridge Financial Solutions

In the above chart we have measured Broadridge Financial Solutions’ prior ROCE against its prior performance, but the future is arguably more important. If you’d like, you can check out the forecasts from the analysts covering Broadridge Financial Solutions for free.

While the current returns on capital are decent, they haven’t changed much. The company has consistently earned 18% for the last five years, and the capital employed within the business has risen 68% in that time. Since 18% is a moderate ROCE though, it’s good to see a business can continue to reinvest at these decent rates of return. Over long periods of time, returns like these might not be too exciting, but with consistency they can pay off in terms of share price returns.

In the end, Broadridge Financial Solutions has proven its ability to adequately reinvest capital at good rates of return. And the stock has followed suit returning a meaningful 62% to shareholders over the last five years. So while investors seem to be recognizing these promising trends, we still believe the stock deserves further research.

On a final note, we’ve found 1 warning sign for Broadridge Financial Solutions that we think you should be aware of.

While Broadridge Financial Solutions may not currently earn the highest returns, we’ve compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.