Computershare in Reasonable Shape Despite Margin Income Impact

Narrow-moat-rated Computershare was significantly impacted by falling interest rates in fiscal 2020, which was the main cause of its 20% fall in underlying EPS. We estimate the company generates around a third of its earnings from the interest it receives on client-owned cash balances, which means earnings are highly sensitive to interest rate movements. The company was already being impacted by falling interest rates in the first half of fiscal 2020, however, the coronavirus pandemic and associated central bank interest rate cuts created additional earnings weakness in the second half.