Morningstar | Computershare's Margin Outlook Is Better Than We Thought
We expect rising interest rates, cost-cutting, and an expansion of the mortgage servicing business to drive an underlying EPS CAGR of 7.1% for Computershare over the next decade. The core registry and related services businesses, which constitute around 60% of group EBITDA, are reasonably mature, and we expect a revenue CAGR of 3.0% over the next decade, supported by rising interest rates and margin income. In contrast, we expect mortgage services growth to drive a revenue CAGR of 4.4% for the business services division, underpinning a group revenue CAGR of 3.6%. We expect an increase in interest rates and margin income, which has a near-100% EBIT margin, to drive group EBIT margin expansion to 31% in fiscal 2028 from 24% in fiscal 2018. The recurring nature of earnings influences our medium fair value uncertainty rating.Computershare is engaged in the operation of investor services, which provides registry maintenance and related services; plan services, which provides administration and related services for employee share and option plans; communication services, which comprise document composition and printing, intelligent mailing, among others; business services, which provides bankruptcy, class action and utilities administration services, voucher services, corporate trust services and mortgage servicing activities; stakeholder relationship management services, which provides investor analysis, investor communication and management information services; and technology services.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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