We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
MarketAxess Up More Than 50% YTD: What's Driving the Rally?
Read MoreHide Full Article
MarketAxess Holdings Inc. (MKTX - Free Report) , with an estimated 85% electronic market share in U.S. high-grade and high-yield bond trading, has been in investors’ good books by virtue of its consistent operating performance.
The stock has gained 54% compared with the industry’s rise of 12.5%. Other companies in the same space such as CBOE Holdings, (CBOE - Free Report) , Nasdaq, Inc. (NDAQ - Free Report) and CME Group, Inc. (CME - Free Report) are up 10.1%, 17% and 5.7%, respectively. MarketAxess has been rewarded for its growth, which is driven by accelerated adoption of Open Trading, substantial growth in its international businesses, and strong engagement with clients.
The company’s revenues have been consistently growing since 2005 (except 2008 when revenues declined by just 0.6%). Revenues have witnessed a CAGR of 14.6% from 2012-2018. This top-line growth was primarily driven by persistent increase in commission (which accounts for the lion’s share of total revenues) received on trading volumes. It has been successful in increasing its trading volumes by way of inorganic and organic strategies.
MarketAxess supplements its organic growth by entering into alliances or by acquiring businesses or technologies, which enables it to enter new markets, provide new products or services.
Some of its notable deals are – the acquisition of Xtrakter Limited that provided the company with an expanded set of technology solutions; an alliance with BlackRock, Inc., which improved the range of trading connections available to global credit market participants and an agreement with S&P Dow Jones Indices to jointly develop indices that will track the most liquid segments of the U.S. corporate bond market. The company’s inorganic growth, which has also aided top-line growth, remains impressive.
The company has been able to fund its acquisition backed by its strong liquidity position. Notably, it has been generating free cash flow over the years. Strong liquidity not only mitigates balance-sheet risks, but also paves the way for an accelerated capital deployment in employees, trading platform, new products, geographic expansion and infrastructure.
The company remains focused on enhancing shareholders’ value through share buy and dividend hikes. The company's latest dividend hike was by 21.4%, marking tenth consecutive years of dividend increase.
Moreover, its efforts of pursuing international opportunities, a compelling economic market model and a diversified product suite of the U.S. high-grade floating rate and other credit bonds to broaden the scope of volumes growth for MarketAxess, going forward, will further drive commission revenues.
Given the strong operating fundamentals, we expect the stock price to continue its rally. The stock carrying a Zacks Rank #3 (Hold) has witnessed an upward revision in 2019 and 2020 earnings estimates over the past 30 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
MarketAxess Up More Than 50% YTD: What's Driving the Rally?
MarketAxess Holdings Inc. (MKTX - Free Report) , with an estimated 85% electronic market share in U.S. high-grade and high-yield bond trading, has been in investors’ good books by virtue of its consistent operating performance.
The stock has gained 54% compared with the industry’s rise of 12.5%. Other companies in the same space such as CBOE Holdings, (CBOE - Free Report) , Nasdaq, Inc. (NDAQ - Free Report) and CME Group, Inc. (CME - Free Report) are up 10.1%, 17% and 5.7%, respectively. MarketAxess has been rewarded for its growth, which is driven by accelerated adoption of Open Trading, substantial growth in its international businesses, and strong engagement with clients.
The company’s revenues have been consistently growing since 2005 (except 2008 when revenues declined by just 0.6%). Revenues have witnessed a CAGR of 14.6% from 2012-2018. This top-line growth was primarily driven by persistent increase in commission (which accounts for the lion’s share of total revenues) received on trading volumes. It has been successful in increasing its trading volumes by way of inorganic and organic strategies.
MarketAxess supplements its organic growth by entering into alliances or by acquiring businesses or technologies, which enables it to enter new markets, provide new products or services.
Some of its notable deals are – the acquisition of Xtrakter Limited that provided the company with an expanded set of technology solutions; an alliance with BlackRock, Inc., which improved the range of trading connections available to global credit market participants and an agreement with S&P Dow Jones Indices to jointly develop indices that will track the most liquid segments of the U.S. corporate bond market. The company’s inorganic growth, which has also aided top-line growth, remains impressive.
The company has been able to fund its acquisition backed by its strong liquidity position. Notably, it has been generating free cash flow over the years. Strong liquidity not only mitigates balance-sheet risks, but also paves the way for an accelerated capital deployment in employees, trading platform, new products, geographic expansion and infrastructure.
The company remains focused on enhancing shareholders’ value through share buy and dividend hikes. The company's latest dividend hike was by 21.4%, marking tenth consecutive years of dividend increase.
Moreover, its efforts of pursuing international opportunities, a compelling economic market model and a diversified product suite of the U.S. high-grade floating rate and other credit bonds to broaden the scope of volumes growth for MarketAxess, going forward, will further drive commission revenues.
Given the strong operating fundamentals, we expect the stock price to continue its rally. The stock carrying a Zacks Rank #3 (Hold) has witnessed an upward revision in 2019 and 2020 earnings estimates over the past 30 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>