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MarketAxess (MKTX) Down 1.5% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for MarketAxess (MKTX - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MarketAxess due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
MarketAxess Q2 Earnings Beat Estimates
MarketAxess Holdings Inc.’s second-quarter 2020 earnings per share of $2.20 beat the Zacks Consensus Estimate by 3.29% and also soared 73% year over year.
Better-than-expected results came on the back of high corporate bond trading volumes, driven by a record corporate bond new issuance and an elevated credit spread volatility.
Operational Update
Revenues of $184.8 million came in line with the Zacks Consensus Estimate and also surged 48% year over year. Commission revenues jumped 51% year over year to $172 million.
All other revenues, comprising information services, post-trade services and other revenues improved 12% to $12.7 million.
Total trading volumes expanded 44.4% year over year to $741.8 billion. Total expenses at MarketAxess were up 25% from the prior-year quarter to $80.7 million. This rise was due to escalated employee compensation and benefit cost, headcount, technology and communication costs, and clearing costs.
Operating income of $104 million ascended 71% year over year owing to strength in revenues, partly offset by elevated costs. Operating margin of 56.4% grew 790 basis points year over year.
Financial Update
Total assets were $1.04 billion as of Jun 30, 2020, up 8.8% from the level as of Dec 31, 2019.
Total cash, cash equivalents and investments as of Jun 30, 2020 were $404.8 million, up 49.6% from the level at 2019 end. During the quarter, the company generated free cash flow of $86.78 million, up 51.4% year over year.
Share Repurchase and Dividend Update
MarketAxess bought back shares worth $5.9 million in the second quarter. The company's board of directors declared a quarterly cash dividend of 60 cents per share, to be paid out on Aug 19, 2020 to its stockholders of record as of Aug 5.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, MarketAxess has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MarketAxess has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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MarketAxess (MKTX) Down 1.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for MarketAxess (MKTX - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MarketAxess due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
MarketAxess Q2 Earnings Beat Estimates
MarketAxess Holdings Inc.’s second-quarter 2020 earnings per share of $2.20 beat the Zacks Consensus Estimate by 3.29% and also soared 73% year over year.
Better-than-expected results came on the back of high corporate bond trading volumes, driven by a record corporate bond new issuance and an elevated credit spread volatility.
Operational Update
Revenues of $184.8 million came in line with the Zacks Consensus Estimate and also surged 48% year over year. Commission revenues jumped 51% year over year to $172 million.
All other revenues, comprising information services, post-trade services and other revenues improved 12% to $12.7 million.
Total trading volumes expanded 44.4% year over year to $741.8 billion.
Total expenses at MarketAxess were up 25% from the prior-year quarter to $80.7 million. This rise was due to escalated employee compensation and benefit cost, headcount, technology and communication costs, and clearing costs.
Operating income of $104 million ascended 71% year over year owing to strength in revenues, partly offset by elevated costs.
Operating margin of 56.4% grew 790 basis points year over year.
Financial Update
Total assets were $1.04 billion as of Jun 30, 2020, up 8.8% from the level as of Dec 31, 2019.
Total cash, cash equivalents and investments as of Jun 30, 2020 were $404.8 million, up 49.6% from the level at 2019 end.
During the quarter, the company generated free cash flow of $86.78 million, up 51.4% year over year.
Share Repurchase and Dividend Update
MarketAxess bought back shares worth $5.9 million in the second quarter.
The company's board of directors declared a quarterly cash dividend of 60 cents per share, to be paid out on Aug 19, 2020 to its stockholders of record as of Aug 5.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, MarketAxess has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MarketAxess has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.