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MarketAxess (MKTX) Down 1.8% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for MarketAxess (MKTX - Free Report) . Shares have lost about 1.8% in that time frame, outperforming 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 drivers.
MarketAxess Q1 Earnings Beat Estimates, Down Y/Y
MarketAxess reported first-quarter 2022 earnings per share of $1.73, which beat the Zacks Consensus Estimate by 1.8%, driven by revenues and trading volumes. However, the bottom line declined from $2.11 per share a year ago.
Total revenues were $186 million for the quarter under review, reflecting a decrease of 4.6% year over year. The figure matched the Zacks Consensus Estimate.
Operational Update
Emerging markets volume decreased 7% year over year while emerging markets ADV was up 5%. For the first quarter, the company announced active total client firms of 1,913, while international client firms totaled 975. Commission revenues of $166.1 million declined 5.5% from $175.8 million.
Nevertheless, all other revenues comprising information services, post-trade services and other revenues climbed 2% year over year to $19.7 million.
For the first quarter, the total credit category’s trading volumes decreased 3% year over year to $12 billion. Rates commission revenue increased 49% year over year to $6.3 billion, driven by record U.S. Treasury ADV.
Total expenses of $98 million increased 7% year over year, primarily due to a rise in costs related to acquired intangible amortization and investments to enhance the trading system and data products.
Operating income increased 21% year over year to $88 million. Operating margin of 47% expanded 340 basis points year over year.
Cash Flow
Cash flows from operations are $23.73 million, up 2.5% year over year During the quarter, the company generated a free cash flow of $33.9 million, which declined from $52.3 million in the last-year comparable period.
Shareholder Value Boost
MarketAxess’ board of directors announced a quarterly cash dividend of 70 cents per share, which will be paid out on May 18, 2022, to shareholders of record as of May 4.
In the first quarter, the company bought back 101,514 shares worth $38.8 million.
Balance Sheet (as of Mar 31, 2022)
The company exited the first quarter with $400.4 million in cash, cash equivalents and investments.
Total assets of $1.7 billion declined sequentially from $1.53 billion. Total stockholders’ equity was $1 billion at the first quarter-end, declining 1.7% from the figure as of Dec 31, 2021.
Guidance
MKTX reconfirms 2022 effective tax rate guidance range of 24% to 26% for 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, MarketAxess has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, 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 #3 (Hold). We expect an in-line return from the stock in the next few months.
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MarketAxess (MKTX) Down 1.8% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for MarketAxess (MKTX - Free Report) . Shares have lost about 1.8% in that time frame, outperforming 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 drivers.
MarketAxess Q1 Earnings Beat Estimates, Down Y/Y
MarketAxess reported first-quarter 2022 earnings per share of $1.73, which beat the Zacks Consensus Estimate by 1.8%, driven by revenues and trading volumes. However, the bottom line declined from $2.11 per share a year ago.
Total revenues were $186 million for the quarter under review, reflecting a decrease of 4.6% year over year. The figure matched the Zacks Consensus Estimate.
Operational Update
Emerging markets volume decreased 7% year over year while emerging markets ADV was up 5%. For the first quarter, the company announced active total client firms of 1,913, while international client firms totaled 975.
Commission revenues of $166.1 million declined 5.5% from $175.8 million.
Nevertheless, all other revenues comprising information services, post-trade services and other revenues climbed 2% year over year to $19.7 million.
For the first quarter, the total credit category’s trading volumes decreased 3% year over year to $12 billion. Rates commission revenue increased 49% year over year to $6.3 billion, driven by record U.S. Treasury ADV.
Total expenses of $98 million increased 7% year over year, primarily due to a rise in costs related to acquired intangible amortization and investments to enhance the trading system and data products.
Operating income increased 21% year over year to $88 million. Operating margin of 47% expanded 340 basis points year over year.
Cash Flow
Cash flows from operations are $23.73 million, up 2.5% year over year During the quarter, the company generated a free cash flow of $33.9 million, which declined from $52.3 million in the last-year comparable period.
Shareholder Value Boost
MarketAxess’ board of directors announced a quarterly cash dividend of 70 cents per share, which will be paid out on May 18, 2022, to shareholders of record as of May 4.
In the first quarter, the company bought back 101,514 shares worth $38.8 million.
Balance Sheet (as of Mar 31, 2022)
The company exited the first quarter with $400.4 million in cash, cash equivalents and investments.
Total assets of $1.7 billion declined sequentially from $1.53 billion. Total stockholders’ equity was $1 billion at the first quarter-end, declining 1.7% from the figure as of Dec 31, 2021.
Guidance
MKTX reconfirms 2022 effective tax rate guidance range of 24% to 26% for 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, MarketAxess has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, 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 #3 (Hold). We expect an in-line return from the stock in the next few months.