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Factors Setting the Tone for MarketAxess (MKTX) in Q4 Earnings
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MarketAxess Holdings Inc. (MKTX - Free Report) is scheduled to release fourth-quarter 2022 results on Jan 25, before the opening bell.
Q4 Estimates
The Zacks Consensus Estimate for MarketAxess’ fourth-quarter earnings per share (EPS) is pegged at $1.53, which indicates an improvement of 11.7% from the prior-year quarter’s reported figure. Our estimate for the metric stands at $1.45 per share.
The consensus mark for revenues stands at $176 million, suggesting 6.7% growth from the year-ago quarter’s reported number. Our estimate indicates total revenues of $175.7 million in the fourth quarter.
Earnings Surprise History
MarketAxess boasts a decent earnings surprise history. Its bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average being 1.92%. This is depicted in the chart below:
The top line of MarketAxess is likely to have benefited on the back of growing commissions, which remain the most significant contributor to its revenues. Commissions might have gained from improved variable transaction fees resulting from growing trading volumes in the fourth quarter.
However, frequent interest rate increases are expected to have reduced the duration of U.S. high-grade trade bonds which might dampen revenue growth in the to-be-reported quarter.
The Zacks Consensus Estimate for total commissions is pegged at $156 million, which indicates a rise of 6.8% from the prior-year quarter’s reported number and matches our estimate. The consensus mark for total transaction fees stands at $123 million, hinting 7.9% improvement from the year-ago quarter’s figure but is lower than our estimate of $123.8 million.
Additionally, improved information services revenues and rate increases driving investment income are likely to have contributed to MKTX’s top-line growth in the fourth quarter.
A diversified trading portfolio comprising U.S. high grade, U.S. high yield, municipal bonds, Eurobonds and emerging markets products coupled with increasing market share gains within the product lines is expected to have provided an impetus to the trading volumes of MarketAxess.
The Zacks Consensus Estimate for both the average daily volume of U.S. high grade and other credit indicates a rise of 17.7% from the prior-year quarter’s reported numbers.
However, the margins of MarketAxess are likely to have taken a hit from an elevated expense level due to continued investments incurred in an effort to boost the trading platform and data product offering in the fourth quarter. Employee compensation and benefits costs are expected to have witnessed an uptick due to headcount additions. Our estimate for MKTX’s operating expenses suggests 15.2% year-over-year increase in the to-be-reported quarter.
What Our Quantitative Model Unveils
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 chances of an earnings beat. That is not the case here as you will 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.
Here are some other companies from the Finance space, which according to our model have the right combination of elements to beat on earnings this time around:
Credicorp Ltd. (BAP - Free Report) has an Earnings ESP of +7.84% and a Zacks Rank of 1, currently. The Zacks Consensus Estimate for BAP’s fourth-quarter 2022 earnings is pegged at $3.91 per share, suggesting 18.5% growth from the prior-year quarter’s reported number.
Credicorp’s earnings beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 1.22%.
Intercorp Financial Services Inc. (IFS - Free Report) has an Earnings ESP of +15.39% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for IFS’s fourth-quarter 2022 earnings stands at $1.04 per share, indicating an 85.7% surge from the prior-year quarter’s reported figure.
The consensus mark for Intercorp Financial’s fourth-quarter earnings has been revised 18.2% north over the past 30 days.
Cboe Global Markets, Inc. (CBOE - Free Report) has an Earnings ESP of +1.48% and a Zacks Rank of 2, currently. The Zacks Consensus Estimate for CBOE’s fourth-quarter 2022 earnings is pegged at $1.73 per share, suggesting an improvement of 1.8% from the prior-year quarter’s reported figure.
CBOE Global Markets’ bottom line outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 4.92%.
Image: Shutterstock
Factors Setting the Tone for MarketAxess (MKTX) in Q4 Earnings
MarketAxess Holdings Inc. (MKTX - Free Report) is scheduled to release fourth-quarter 2022 results on Jan 25, before the opening bell.
Q4 Estimates
The Zacks Consensus Estimate for MarketAxess’ fourth-quarter earnings per share (EPS) is pegged at $1.53, which indicates an improvement of 11.7% from the prior-year quarter’s reported figure. Our estimate for the metric stands at $1.45 per share.
The consensus mark for revenues stands at $176 million, suggesting 6.7% growth from the year-ago quarter’s reported number. Our estimate indicates total revenues of $175.7 million in the fourth quarter.
Earnings Surprise History
MarketAxess boasts a decent earnings surprise history. Its bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average being 1.92%. 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 to Note
The top line of MarketAxess is likely to have benefited on the back of growing commissions, which remain the most significant contributor to its revenues. Commissions might have gained from improved variable transaction fees resulting from growing trading volumes in the fourth quarter.
However, frequent interest rate increases are expected to have reduced the duration of U.S. high-grade trade bonds which might dampen revenue growth in the to-be-reported quarter.
The Zacks Consensus Estimate for total commissions is pegged at $156 million, which indicates a rise of 6.8% from the prior-year quarter’s reported number and matches our estimate. The consensus mark for total transaction fees stands at $123 million, hinting 7.9% improvement from the year-ago quarter’s figure but is lower than our estimate of $123.8 million.
Additionally, improved information services revenues and rate increases driving investment income are likely to have contributed to MKTX’s top-line growth in the fourth quarter.
A diversified trading portfolio comprising U.S. high grade, U.S. high yield, municipal bonds, Eurobonds and emerging markets products coupled with increasing market share gains within the product lines is expected to have provided an impetus to the trading volumes of MarketAxess.
The Zacks Consensus Estimate for both the average daily volume of U.S. high grade and other credit indicates a rise of 17.7% from the prior-year quarter’s reported numbers.
However, the margins of MarketAxess are likely to have taken a hit from an elevated expense level due to continued investments incurred in an effort to boost the trading platform and data product offering in the fourth quarter. Employee compensation and benefits costs are expected to have witnessed an uptick due to headcount additions. Our estimate for MKTX’s operating expenses suggests 15.2% year-over-year increase in the to-be-reported quarter.
What Our Quantitative Model Unveils
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 chances of an earnings beat. That is not the case here as you will 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 3. You can see the complete list of today's Zacks #1 Rank stocks here.
Stocks to Consider
Here are some other companies from the Finance space, which according to our model have the right combination of elements to beat on earnings this time around:
Credicorp Ltd. (BAP - Free Report) has an Earnings ESP of +7.84% and a Zacks Rank of 1, currently. The Zacks Consensus Estimate for BAP’s fourth-quarter 2022 earnings is pegged at $3.91 per share, suggesting 18.5% growth from the prior-year quarter’s reported number.
Credicorp’s earnings beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 1.22%.
Intercorp Financial Services Inc. (IFS - Free Report) has an Earnings ESP of +15.39% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for IFS’s fourth-quarter 2022 earnings stands at $1.04 per share, indicating an 85.7% surge from the prior-year quarter’s reported figure.
The consensus mark for Intercorp Financial’s fourth-quarter earnings has been revised 18.2% north over the past 30 days.
Cboe Global Markets, Inc. (CBOE - Free Report) has an Earnings ESP of +1.48% and a Zacks Rank of 2, currently. The Zacks Consensus Estimate for CBOE’s fourth-quarter 2022 earnings is pegged at $1.73 per share, suggesting an improvement of 1.8% from the prior-year quarter’s reported figure.
CBOE Global Markets’ bottom line outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 4.92%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.