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Growth & Income

There is a lot for investors to like about BGC Partners, Inc. (BGCP - Snapshot Report).

The company pays a dividend that yields a juicy 6.4%, analysts are projecting double-digit earnings growth over the next two years, and the stock trades at a PEG ratio below 1.0.

Moreover, estimates have been rising since the company reported strong fourth quarter results.

BGC Partners is a global intermediary to the financial markets, brokering a wide range of financial products.

Fourth Quarter Results

BGC Partners reported a strong fourth quarter on February 17. Earnings per share came in at 17 cents, beating the Zacks Consensus Estimate by 2 cents. This was a 143% increase over the same quarter in 2009.

Revenues were $322.5 million, ahead of the Zacks Consensus Estimate of $313 million, and up 8% year-over-year. Brokerage revenues, which accounted for more than 90% of total revenue in the quarter, increased 9%, driven by a 13% jump in commissions. Revenues related to fully electronic trading grew by 16%.

Meanwhile, total expenses were essentially flat year-over-year as the company leveraged its fully electronic trading platform. Total compensation and employee benefits declined 6%.

The company's pre-tax earnings margin jumped from 7.7% to 14.1%.

Outlook

The company expects positive momentum in revenues and earnings as it continues to expand its e-broking capabilities and brokerage staff. Management projects Q1 revenue growth between 2-6% and earnings growth of 26-40%. The Zacks Consensus Estimate is calling for EPS of 22 cents.

BGC Partners reports first quarter results on Thursday, May 5.

Analysts are projecting more strong growth from the company over the next two years. The Zacks Consensus Estimate for 2011 is $0.81, representing 22% EPS growth, while the 2012 consensus estimate is 14% higher at $0.93.

It is a Zacks #2 Rank (Buy) stock.

6.4% Yield

BGC Partners pays a dividend that yields a juicy 6.4%.

Although the company had a very high payout ratio of 97% in 2010, more dividend hikes might be on the horizon. The company has stated that it intends to pay at least 75% of its after-tax distributable earnings as cash dividends.

Additionally, CEO Howard W. Lutnick noted in the Q4 press release that "as BGC continues to post solid gains, we expect to increase our common dividend over time in a tax-efficient manner and to continue to enhance shareholder value."

Attractive Valuation

Shares have soared around 75% since late August as the stock market has been rallying. Valuation is still cheap, however, with shares trading at 11.0x forward earnings, a discount to the industry average of 14.9x.

Its PEG ratio is an attractive 0.88 based on a 12.5% long-term growth rate.

BGC Partners, Inc. is headquartered in New York, New York and has a market cap of $867 million.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

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