MarketAxess Holdings, Inc.
by Michael VodickaAugust 15, 2011 | Comments : 0 Recommended this article: (0)
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MarketAxess Holdings, Inc. provides an electronic trading platform that financial institutions use to trade corporate bonds and other fixed-income instruments. The company was founded in 2000 and has a market cap of $950 million.
The big gains in MKTX have come on the back of steady earnings growth, where the company recently recorded its ninth consecutive quarter of record revenue with Q2 results that came in ahead of expectations.
Revenue for the quarter was up 30% from last year to $46 million. Earnings also came in strong at 30 cents, 15% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 18% over the last four quarters.
The good quarter was driven by heavier trading volumes, with commission revenue jumping to $39 million from $30 million. With pre-tax income coming in at $20 million, MKTX operates in a very high margin business.
Financial Profile and Dividend
MarketAxess's high margins and strong cash flows have driven its financial profile, with cash and short-term investments up $23 million from last year to $136 million and no long-term debt. Shares also pay a 1.5% dividend.
We saw some pretty solid movement in estimates off the good quarter, with the current year climbing 9% to $1.12. The next-year estimate is pegged at $1.31, a bullish 17% growth projection.
MKTX currently trades with a PEG ratio above 1 and a forward P/E of 22X, a premium to its peer average of 16%. The company does offer solid earnings growth but the PEG ratio says you'll have to pay up a bit for it.
On the chart, shares recently pulled back with the market, but the long-term trend is bullish. Take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Momentum Trader Service.
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