CDK Global (NASDAQ:CDK) and Broadridge Financial Solutions (NYSE:BR) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, analyst recommendations, risk, valuation, institutional ownership and earnings.
Insider & Institutional Ownership
82.2% of CDK Global shares are owned by institutional investors. Comparatively, 85.0% of Broadridge Financial Solutions shares are owned by institutional investors. 0.5% of CDK Global shares are owned by company insiders. Comparatively, 2.0% of Broadridge Financial Solutions shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Risk & Volatility
CDK Global has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500. Comparatively, Broadridge Financial Solutions has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.
Dividends
CDK Global pays an annual dividend of $0.60 per share and has a dividend yield of 1.1%. Broadridge Financial Solutions pays an annual dividend of $2.30 per share and has a dividend yield of 1.5%. CDK Global pays out 19.7% of its earnings in the form of a dividend. Broadridge Financial Solutions pays out 45.7% 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. CDK Global has raised its dividend for 1 consecutive years and Broadridge Financial Solutions has raised its dividend for 13 consecutive years. Broadridge Financial Solutions is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
This is a breakdown of recent recommendations for CDK Global and Broadridge Financial Solutions, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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CDK Global | 0 | 0 | 3 | 0 | 3.00 |
Broadridge Financial Solutions | 0 | 3 | 3 | 0 | 2.50 |
CDK Global currently has a consensus price target of $64.75, suggesting a potential upside of 18.94%. Broadridge Financial Solutions has a consensus price target of $154.1667, suggesting a potential downside of 1.80%. Given CDK Global's stronger consensus rating and higher possible upside, equities research analysts clearly believe CDK Global is more favorable than Broadridge Financial Solutions.
Valuation & Earnings
This table compares CDK Global and Broadridge Financial Solutions' top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
CDK Global | $1.96 billion | 3.38 | $207.50 million | $3.05 | 17.85 |
Broadridge Financial Solutions | $4.53 billion | 4.01 | $462.50 million | $5.03 | 31.21 |
Broadridge Financial Solutions has higher revenue and earnings than CDK Global. CDK Global 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.
Profitability
This table compares CDK Global and Broadridge Financial Solutions' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
CDK Global | 9.25% | -62.84% | 12.62% |
Broadridge Financial Solutions | 10.27% | 48.98% | 13.16% |
Summary
Broadridge Financial Solutions beats CDK Global on 12 of the 16 factors compared between the two stocks.