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Will Strong Commissions Aid MarketAxess' (MKTX) Q4 Earnings?
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MarketAxess Holdings Inc. (MKTX - Free Report) is scheduled to release fourth-quarter 2023 results on Jan 31, 2024, before the opening bell.
Q4 Estimates
The Zacks Consensus Estimate for MarketAxess’ fourth-quarter earnings per share is pegged at $1.72, which indicates an 8.9% rise from the prior-year quarter’s reported figure.
The consensus mark for revenues is pegged at $195 million, suggesting 9.6% growth from the year-ago quarter’s reported number.
Earnings Surprise History
MarketAxess’ bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 2.03%. This is depicted in the chart below:
Higher trading volumes and strong estimated market share gains across most of its credit product lines are likely to have boosted credit commission revenues in the fourth quarter. However, the upside is likely to have been partly offset by a decline in total credit fee capture, which, in turn, may have been the outcome of the lower duration of U.S. high-grade bonds traded on MKTX’s platform and a shift in product mix of U.S. high-yield.
Our estimate for the total credit trading volume indicates a 5.6% year-over-year increase.
Solid trading volumes in the international business of MarketAxess are expected to have driven the company’s overall commissions in the fourth quarter. The Zacks Consensus Estimate for commissions is pegged at $170.8 million, suggesting 7.8% growth from the prior-year quarter’s reported number. We expect it to grow 7.9% year over year.
Increased utilization of its data product suite and new contracts are likely to have provided an impetus to MarketAxess’ information services revenues in the to-be-reported quarter. This, in turn, may have driven overall revenue growth. The consensus mark for fourth-quarter information services revenues is pinned at $11.9 million, which implies a 14.5% rise from the year-ago quarter’s reported figure. We expect it to be $11.3 million.
The overall trading volumes of MarketAxess are expected to have suffered due to a decrease in trading volumes from its rates product line. Nevertheless, a diversified trading product portfolio and increased utilization of its Open Trading platform may have provided some respite. The Zacks Consensus Estimate for fourth-quarter total trading volume is pegged at 1.8 million, suggesting a 1% dip from the prior-year quarter’s reported figure. Our estimate anticipates it to be 1.9 million in the to-be-reported quarter.
However, MKTX’s margins are likely to have taken a hit from elevated operating expenses, resulting from continuous investments to upgrade trading and data capabilities. Expenses related to the Pragma acquisition may also have added to the fourth quarter’s overall expenses. Increased headcount is expected to have increased employee compensation and benefits expenses. We forecast total expenses to be $114.7 million in the fourth quarter, indicating an increase of 14.4% year over year.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for MarketAxess this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: MarketAxess has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: MKTX currently carries a Zacks Rank of 2.
Stocks to Consider
While an earnings beat looks uncertain for MarketAxess, here are some companies from the Finance space, which according to our model, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for VICI’s fourth-quarter 2023 earnings is pegged at 55 cents per share, which indicates an improvement of 7.8% from the prior-year quarter’s reported figure.
VICI Properties’ bottom line beat estimates in each of the trailing four quarters, the average surprise being 1.93%.
Realty Income Corporation (O - Free Report) currently has an Earnings ESP of +0.19% and a Zacks Rank of 2. The Zacks Consensus Estimate for O’s fourth-quarter 2023 earnings is pegged at $1.02 per share, suggesting 2% growth from the year-ago quarter’s reported figure.
Realty Income’s bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 0.28%.
Intercontinental Exchange, Inc. (ICE - Free Report) has an Earnings ESP of +0.31% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for ICE’s fourth-quarter 2023 earnings is pegged at $1.29 per share, which indicates an improvement of 3.2% from the prior-year quarter’s reported figure.
Intercontinental Exchange’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 2.15%.
Image: Bigstock
Will Strong Commissions Aid MarketAxess' (MKTX) Q4 Earnings?
MarketAxess Holdings Inc. (MKTX - Free Report) is scheduled to release fourth-quarter 2023 results on Jan 31, 2024, before the opening bell.
Q4 Estimates
The Zacks Consensus Estimate for MarketAxess’ fourth-quarter earnings per share is pegged at $1.72, which indicates an 8.9% rise from the prior-year quarter’s reported figure.
The consensus mark for revenues is pegged at $195 million, suggesting 9.6% growth from the year-ago quarter’s reported number.
Earnings Surprise History
MarketAxess’ bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 2.03%. This is depicted in the chart below:
MarketAxess Holdings Inc. Price and EPS Surprise
MarketAxess Holdings Inc. price-eps-surprise | MarketAxess Holdings Inc. Quote
Factors at Play
Higher trading volumes and strong estimated market share gains across most of its credit product lines are likely to have boosted credit commission revenues in the fourth quarter. However, the upside is likely to have been partly offset by a decline in total credit fee capture, which, in turn, may have been the outcome of the lower duration of U.S. high-grade bonds traded on MKTX’s platform and a shift in product mix of U.S. high-yield.
Our estimate for the total credit trading volume indicates a 5.6% year-over-year increase.
Solid trading volumes in the international business of MarketAxess are expected to have driven the company’s overall commissions in the fourth quarter. The Zacks Consensus Estimate for commissions is pegged at $170.8 million, suggesting 7.8% growth from the prior-year quarter’s reported number. We expect it to grow 7.9% year over year.
Increased utilization of its data product suite and new contracts are likely to have provided an impetus to MarketAxess’ information services revenues in the to-be-reported quarter. This, in turn, may have driven overall revenue growth. The consensus mark for fourth-quarter information services revenues is pinned at $11.9 million, which implies a 14.5% rise from the year-ago quarter’s reported figure. We expect it to be $11.3 million.
The overall trading volumes of MarketAxess are expected to have suffered due to a decrease in trading volumes from its rates product line. Nevertheless, a diversified trading product portfolio and increased utilization of its Open Trading platform may have provided some respite. The Zacks Consensus Estimate for fourth-quarter total trading volume is pegged at 1.8 million, suggesting a 1% dip from the prior-year quarter’s reported figure. Our estimate anticipates it to be 1.9 million in the to-be-reported quarter.
However, MKTX’s margins are likely to have taken a hit from elevated operating expenses, resulting from continuous investments to upgrade trading and data capabilities. Expenses related to the Pragma acquisition may also have added to the fourth quarter’s overall expenses. Increased headcount is expected to have increased employee compensation and benefits expenses. We forecast total expenses to be $114.7 million in the fourth quarter, indicating an increase of 14.4% year over year.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for MarketAxess this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: MarketAxess has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: MKTX currently carries a Zacks Rank of 2.
Stocks to Consider
While an earnings beat looks uncertain for MarketAxess, here are some companies from the Finance space, which according to our model, have the right combination of elements to beat on earnings this time around:
VICI Properties Inc. (VICI - Free Report) has an Earnings ESP of +2.16% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for VICI’s fourth-quarter 2023 earnings is pegged at 55 cents per share, which indicates an improvement of 7.8% from the prior-year quarter’s reported figure.
VICI Properties’ bottom line beat estimates in each of the trailing four quarters, the average surprise being 1.93%.
Realty Income Corporation (O - Free Report) currently has an Earnings ESP of +0.19% and a Zacks Rank of 2. The Zacks Consensus Estimate for O’s fourth-quarter 2023 earnings is pegged at $1.02 per share, suggesting 2% growth from the year-ago quarter’s reported figure.
Realty Income’s bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 0.28%.
Intercontinental Exchange, Inc. (ICE - Free Report) has an Earnings ESP of +0.31% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for ICE’s fourth-quarter 2023 earnings is pegged at $1.29 per share, which indicates an improvement of 3.2% from the prior-year quarter’s reported figure.
Intercontinental Exchange’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 2.15%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.