Knight Capital Group, Inc.

Knight Capital Group, Inc. (NITE - Snapshot Report) is fresh off the heels of impressive fourth-quarter results in which revenue was up 28% from last year. The company also recently announced it is selling its unprofitable hedge fund division in order to focus on its core business of electronic trading services.

Company Description

Knight Capital Group, Inc. is a financial services company that specializes in providing electronic access to capital markets. The company was founded in 1995 and has a market cap of $1.61 billion.

With the markets operating in a frenzied state of the last few months, trading volumes have ticked higher. This has proven to be a boon for Knight and its electronic trading services, on display when the company reported strong fourth-quarter results on Jan 22.

Fourth-Quarter Results

Revenue was up 28% from last year to $330.2 million. When stripping out a one-time gain on the sale of assets, earnings came in at 56 cents per share, far ahead of the consensus estimate of 38 cents.

Segment Results

Knight's global markets business drove its revenue growth, up 43% from last year to $316.9 million. The company's daily average U.S. equity trades were up big, to 4 million from 1.7 million.

Shedding An Unprofitable Division

On Jan 27, Knight announced it was selling its majority owned Deephaven hedge fund to Stark & Roth Inc. for $7.3 million. Investors have poured out of the Deephaven fund in response to the tough market, with money under management dropping to $2.7 billion from $4 billion at the beginning of the year. This allows Knight to focus on its most profitable global markets division that operates its electronic trading services.

Analyst Estimates

After the company's impressive quarterly results, the analyst community went ahead and raised their estimates. The current-year estimate is up 12 cents to $1.57 per share. The next-year estimate is up 35 cents to $1.75, a 11.25% earnings growth projection.

The Chart

Shares of NITE had been consolidating into a wedge formation since mid October before breaking above a key level of resistance at $16.50 and surging higher on the great quarterly results. Take a look at the chart below.