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Here's Why You Should Retain MarketAxess (MKTX) Stock for Now
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MarketAxess Holdings Inc.’s (MKTX - Free Report) solid growth in trading volumes, significant price movement for clients and record market share gains make it worth retaining in one’s portfolio. Also, its favorable growth estimates are confidence boosters for investors.
The company is a leading multi-dealer trading platform offering institutional investors access to global liquidity in products. Its main source of revenue is commissions, while information services and post-trade services form the remaining portion.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Rising Estimates
The Zacks Consensus Estimate for MarketAxess’ 2023 earnings is pegged at $7.07 per share, which indicates 6% year-over-year growth. The company beat earnings estimates in all the last four quarters, with an average surprise of 4%.
The consensus estimate for 2023 revenues stands at $766 million, indicating 6.6% growth from 2022. Significant growth in information services revenues will likely support the upside. Our estimate for the metric suggests a 16.4% year-over-year increase.
Return on Equity
Return on equity, a measure reflecting how efficiently a company utilizes shareholders’ money, was 23.1% in the trailing 12 months, better than the industry average of 11.8%.
Business Tailwinds
A significant portion of MKTX’s total revenues comes from commissions, which improved 3.3% year over year in the first half of 2023. The figures are expected to grow further in the coming days due to strong estimated market share gains and higher volumes. We expect this metric to rise 5.3% in 2023.
The company’s focus on technological improvements is key for long-term success. In August 2023, it agreed to acquire Pragma, a provider of quantitative trading technology.The move will likely aid MarketAxess in accelerating the development of analytics and execution algorithms for fixed-income products. It is also expected to assist in tapping the FX hedging solutions space for its emerging market customers.
The company’s Adaptive Auto-X solution seems to add further strength to its suite of automated trading solutions. Combined with its Composite+ pricing engine, Adaptive Auto-X is expected to improve fixed-income algorithmic trading, which will bring more clients.
MKTX’s strategic alliances are helping the company to boost its portfolio. Some of its major partnerships include those with BlackRock, S&P Dow Jones Indices, China Foreign Exchange Trade System, Tradeweb Markets and Bloomberg.
The company’s strong balance sheet enables it to support shareholder-friendly moves. It exited the second quarter with total cash and cash equivalents and investments of $396.5 million and had only $79.9 million in operating lease liabilities. It had $100 million left in its repurchase authorization in June-end
Key Concerns
There are a few factors that are impeding the stock’s growth lately.
Its total expenses have been rising over the years, eroding margins. Our estimate for 2023 expenses indicates a nearly 8.5% increase from the year-ago level, due to higher marketing and advertising, technology and communications, and employee compensation and benefits costs.
The company’s expensive valuation poses a concern. Its forward 12-month P/E ratio of 26.80X is higher than the industry average of 22.96X. Moreover, Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
The consensus mark for Primerica’s current-year earnings indicates a 36.6% year-over-year increase. Furthermore, the consensus estimate for PRI’s revenues in 2023 suggests 3.1% year-over-year growth.
The Zacks Consensus Estimate for Trupanion’s current-year earnings has improved 12.7% in the past 60 days. Also, the consensus mark for TRUP’s revenues in 2023 suggests 19.5% year-over-year growth.
The consensus mark for Aflac’s current-year earnings indicates a 12.2% year-over-year increase. The Zacks Consensus Estimate for AFL’s current-year earnings has improved 3.3% in the past 60 days.
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Here's Why You Should Retain MarketAxess (MKTX) Stock for Now
MarketAxess Holdings Inc.’s (MKTX - Free Report) solid growth in trading volumes, significant price movement for clients and record market share gains make it worth retaining in one’s portfolio. Also, its favorable growth estimates are confidence boosters for investors.
The company is a leading multi-dealer trading platform offering institutional investors access to global liquidity in products. Its main source of revenue is commissions, while information services and post-trade services form the remaining portion.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Rising Estimates
The Zacks Consensus Estimate for MarketAxess’ 2023 earnings is pegged at $7.07 per share, which indicates 6% year-over-year growth. The company beat earnings estimates in all the last four quarters, with an average surprise of 4%.
The consensus estimate for 2023 revenues stands at $766 million, indicating 6.6% growth from 2022. Significant growth in information services revenues will likely support the upside. Our estimate for the metric suggests a 16.4% year-over-year increase.
Return on Equity
Return on equity, a measure reflecting how efficiently a company utilizes shareholders’ money, was 23.1% in the trailing 12 months, better than the industry average of 11.8%.
Business Tailwinds
A significant portion of MKTX’s total revenues comes from commissions, which improved 3.3% year over year in the first half of 2023. The figures are expected to grow further in the coming days due to strong estimated market share gains and higher volumes. We expect this metric to rise 5.3% in 2023.
The company’s focus on technological improvements is key for long-term success. In August 2023, it agreed to acquire Pragma, a provider of quantitative trading technology.The move will likely aid MarketAxess in accelerating the development of analytics and execution algorithms for fixed-income products. It is also expected to assist in tapping the FX hedging solutions space for its emerging market customers.
The company’s Adaptive Auto-X solution seems to add further strength to its suite of automated trading solutions. Combined with its Composite+ pricing engine, Adaptive Auto-X is expected to improve fixed-income algorithmic trading, which will bring more clients.
MKTX’s strategic alliances are helping the company to boost its portfolio. Some of its major partnerships include those with BlackRock, S&P Dow Jones Indices, China Foreign Exchange Trade System, Tradeweb Markets and Bloomberg.
The company’s strong balance sheet enables it to support shareholder-friendly moves. It exited the second quarter with total cash and cash equivalents and investments of $396.5 million and had only $79.9 million in operating lease liabilities. It had $100 million left in its repurchase authorization in June-end
Key Concerns
There are a few factors that are impeding the stock’s growth lately.
Its total expenses have been rising over the years, eroding margins. Our estimate for 2023 expenses indicates a nearly 8.5% increase from the year-ago level, due to higher marketing and advertising, technology and communications, and employee compensation and benefits costs.
The company’s expensive valuation poses a concern. Its forward 12-month P/E ratio of 26.80X is higher than the industry average of 22.96X. Moreover, Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Stocks to Consider
Some better-ranked stocks from the broader Finance space are Primerica, Inc. (PRI - Free Report) ,Trupanion, Inc. (TRUP - Free Report) and Aflac Incorporated (AFL - Free Report) . Each of these companies presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus mark for Primerica’s current-year earnings indicates a 36.6% year-over-year increase. Furthermore, the consensus estimate for PRI’s revenues in 2023 suggests 3.1% year-over-year growth.
The Zacks Consensus Estimate for Trupanion’s current-year earnings has improved 12.7% in the past 60 days. Also, the consensus mark for TRUP’s revenues in 2023 suggests 19.5% year-over-year growth.
The consensus mark for Aflac’s current-year earnings indicates a 12.2% year-over-year increase. The Zacks Consensus Estimate for AFL’s current-year earnings has improved 3.3% in the past 60 days.