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Buy, Sell or Hold BGC Group Stock? Key Insights Ahead of Q1 Earnings
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As a global financial services firm specializing in brokerage and financial technology, BGC Group Inc. (BGC - Free Report) is at the forefront of digital transformation in capital markets. The company is slated to announce first-quarter 2025 results on Wednesday before the opening bell.
BGC’s fourth-quarter 2024 performance was decent. Results benefited from the strong brokerage revenue growth in the Energy, Commodities and Shipping (ECS), Rates and Foreign Exchange businesses. Further, Data, Network and Post-trade revenues witnessed a rise.
BGC Group has a decent earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in one of the trailing four quarters and met thrice, with the average beat being 3.26%.
Earnings Surprise
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for sales of $635.1 million suggests 9.8% growth on a year-over-year basis. In the past week, the consensus estimate for earnings has remained unchanged at 29 cents. This indicates a rise of 16%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
BGC’s Earnings Estimates
Image Source: Zacks Investment Research
Is it the right time to add BGC stock to your portfolio? Let’s analyze the factors that are likely to have influenced its performance this time.
Factors to Note & Estimates for BGC Group’s Q1 Results
Revenues: During the first quarter, client activity was robust, driven by heightened volatility amid tariff policy concerns. Thus, BGC Group’s total brokerage revenues are likely to have witnessed solid growth similar to that of its peers, Robinhood Markets (HOOD - Free Report) and Interactive Brokers (IBKR - Free Report) .
Robinhood, which announced first-quarter results on April 30, recorded a 77.2% year-over-year surge in transaction-based revenues. This was largely driven by an improvement in options, equities and cryptocurrencies revenues. Likewise, Interactive Brokers, which released quarterly numbers on April 15, witnessed a 35.6% jump in commissions.
The Zacks Consensus Estimate for BGC’s total brokerage revenues is pegged at $576.3 million, indicating a 9.1% rise from the prior-year quarter. This is likely to have been driven by higher rates, FX and ECS brokerage revenues.
The consensus estimate for rates is $182.3 million, suggesting 4.1% growth. Further, the Zacks Consensus Estimate for foreign exchange and ECS revenues is pegged at $103.3 million and $153.5 million, respectively. Foreign exchange revenues are projected to grow 23%, while ECS revenues are estimated to jump 29.6% year over year.
Additionally, the consensus estimate for credit and equities revenues is pinned at $74.9 million and $62.2 million, respectively. Credit revenues are projected to fall 14.5%, while equities revenues are estimated to decline 1.1% year over year.
The Zacks Consensus Estimate for Data, Network and Post-trade is pegged at $33.9 million, suggesting a 9.7% increase from the prior-year quarter.
BGC Group expects revenues between $610 million and $660 million, up from $578.6 million recorded in the prior-year quarter.
Expenses: Total operating expenses are likely to have remained elevated as the company invests in key areas to enhance platform capabilities, drive product innovation and improve customer support. Also, the company’s inorganic expansion efforts are likely to have resulted in some restructuring/merger-related charges during the quarter.
What Our Model Unveils for BGC Group
Our quantitative model does not conclusively predict an earnings beat for BGC Group this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you can see below.
Earnings ESP: BGC Group has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
BGC Group shares have had a decent run on the bourses since the beginning of the year. The stock rose 3.3% so far this year compared with the industry’s rally of 1.4%. Further, it fared better than Interactive Brokers’ rise of 2.8%, while Robinhood surged 30.4% during the same period.
BGC YTD Price Performance
Image Source: Zacks Investment Research
Now, let’s look at the value BGC Group offers investors at current levels.
At present, BGC is trading at 15.05X 12-month trailing price/tangible book (P/TB), below its three-year median of 18.90X. Meanwhile, the industry’s P/TB TTM is 2.78X. Hence, the stock looks expensive compared with the industry average.
BGC Group P/TB TTM
Image Source: Zacks Investment Research
Further, Robinhood has a P/TB TTM of 5.85X and Interactive Brokers’ P/TB TTM is 1.14X. So, BGC Group is trading at a massive premium compared with its peers.
Investment Thesis for BGC Group
BGC Group’s proprietary Fenics platform powers its electronic trading operations, enabling faster, more efficient transactions. The platform provides trading solutions, market data and analytics to institutional clients. Following the 2023 spin-off of its commercial real estate arm, Newmark, the company has sharpened its focus on its capital markets and fintech operations. This shift toward technology-driven services allows it to enhance margins and reduce dependence on traditional, labor-intensive models.
BGC Group acquired OTC Global Holdings, LP, one of the fastest-growing energy and commodities brokerage firms, in April for $325 million. Moreover, it acquired Sage Energy Partners, LP, an energy and environmental brokerage firm, last year. These buyouts represent an advancement in the company's growth strategy, solidifying the ECS business as the largest asset class within the company. These acquisitions are projected to contribute more than $450 million in annual revenues and have positioned BGC as a major player in the energy sector.
ECS Acquisitions’ Expected Revenue Impact
Image Source: BGC Group Inc.
BGC Group is well-positioned to capitalize on growing environmental and energy transition trends and will keep benefiting from consistent global demand for oil, the single largest source of energy. As such, the company’s top-line growth is anticipated to be impressive. Over the last five years (2019-2024), the company’s revenues recorded a CAGR of 1.5%.
Other than the above-mentioned buyouts, BGC Group acquired ContiCap, Open Energy Group and Trident in 2023. These deals positioned the company as one of the leading global brokerage firms and bolstered its market share.
BGC Group has been prioritizing share repurchases over dividend payouts. The company pays 2 cents per share as a quarterly dividend, which was increased 100% in February 2024. Additionally, in October 2024, the company re-authorized a $400 million share repurchase program. As of Dec. 31, 2024, approximately $350.0 million remained under this authorization.
How to Play BGC Group Stock Ahead of Q1 Earnings
Heightened market volatility, BGC Group’s efforts to diversify its offerings and expansion initiatives to grow market share through acquisitions and organically bode well for its first-quarter results. However, uncertainties regarding tariffs, inflationary pressure, increased regulatory oversight and intense competition keep investors cautious about the company’s growth.
Nonetheless, BGC Group seems to be better placed to confront the near-term challenges and offer robust returns to investors. This makes it a better investment choice. While BGC stock might seem pricey, its premium valuation is justifiable considering the higher growth expectations.
Thus, BGC Group's prospects look promising. Investors must consider adding the stock to their portfolio for attractive returns.
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Buy, Sell or Hold BGC Group Stock? Key Insights Ahead of Q1 Earnings
As a global financial services firm specializing in brokerage and financial technology, BGC Group Inc. (BGC - Free Report) is at the forefront of digital transformation in capital markets. The company is slated to announce first-quarter 2025 results on Wednesday before the opening bell.
BGC’s fourth-quarter 2024 performance was decent. Results benefited from the strong brokerage revenue growth in the Energy, Commodities and Shipping (ECS), Rates and Foreign Exchange businesses. Further, Data, Network and Post-trade revenues witnessed a rise.
BGC Group has a decent earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in one of the trailing four quarters and met thrice, with the average beat being 3.26%.
Earnings Surprise
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for sales of $635.1 million suggests 9.8% growth on a year-over-year basis. In the past week, the consensus estimate for earnings has remained unchanged at 29 cents. This indicates a rise of 16%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
BGC’s Earnings Estimates
Image Source: Zacks Investment Research
Is it the right time to add BGC stock to your portfolio? Let’s analyze the factors that are likely to have influenced its performance this time.
Factors to Note & Estimates for BGC Group’s Q1 Results
Revenues: During the first quarter, client activity was robust, driven by heightened volatility amid tariff policy concerns. Thus, BGC Group’s total brokerage revenues are likely to have witnessed solid growth similar to that of its peers, Robinhood Markets (HOOD - Free Report) and Interactive Brokers (IBKR - Free Report) .
Robinhood, which announced first-quarter results on April 30, recorded a 77.2% year-over-year surge in transaction-based revenues. This was largely driven by an improvement in options, equities and cryptocurrencies revenues. Likewise, Interactive Brokers, which released quarterly numbers on April 15, witnessed a 35.6% jump in commissions.
The Zacks Consensus Estimate for BGC’s total brokerage revenues is pegged at $576.3 million, indicating a 9.1% rise from the prior-year quarter. This is likely to have been driven by higher rates, FX and ECS brokerage revenues.
The consensus estimate for rates is $182.3 million, suggesting 4.1% growth. Further, the Zacks Consensus Estimate for foreign exchange and ECS revenues is pegged at $103.3 million and $153.5 million, respectively. Foreign exchange revenues are projected to grow 23%, while ECS revenues are estimated to jump 29.6% year over year.
Additionally, the consensus estimate for credit and equities revenues is pinned at $74.9 million and $62.2 million, respectively. Credit revenues are projected to fall 14.5%, while equities revenues are estimated to decline 1.1% year over year.
The Zacks Consensus Estimate for Data, Network and Post-trade is pegged at $33.9 million, suggesting a 9.7% increase from the prior-year quarter.
BGC Group expects revenues between $610 million and $660 million, up from $578.6 million recorded in the prior-year quarter.
Expenses: Total operating expenses are likely to have remained elevated as the company invests in key areas to enhance platform capabilities, drive product innovation and improve customer support. Also, the company’s inorganic expansion efforts are likely to have resulted in some restructuring/merger-related charges during the quarter.
What Our Model Unveils for BGC Group
Our quantitative model does not conclusively predict an earnings beat for BGC Group this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you can see below.
Earnings ESP: BGC Group has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: BGC sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
BGC Stock’s Price Performance & Valuation
BGC Group shares have had a decent run on the bourses since the beginning of the year. The stock rose 3.3% so far this year compared with the industry’s rally of 1.4%. Further, it fared better than Interactive Brokers’ rise of 2.8%, while Robinhood surged 30.4% during the same period.
BGC YTD Price Performance
Image Source: Zacks Investment Research
Now, let’s look at the value BGC Group offers investors at current levels.
At present, BGC is trading at 15.05X 12-month trailing price/tangible book (P/TB), below its three-year median of 18.90X. Meanwhile, the industry’s P/TB TTM is 2.78X. Hence, the stock looks expensive compared with the industry average.
BGC Group P/TB TTM
Image Source: Zacks Investment Research
Further, Robinhood has a P/TB TTM of 5.85X and Interactive Brokers’ P/TB TTM is 1.14X. So, BGC Group is trading at a massive premium compared with its peers.
Investment Thesis for BGC Group
BGC Group’s proprietary Fenics platform powers its electronic trading operations, enabling faster, more efficient transactions. The platform provides trading solutions, market data and analytics to institutional clients. Following the 2023 spin-off of its commercial real estate arm, Newmark, the company has sharpened its focus on its capital markets and fintech operations. This shift toward technology-driven services allows it to enhance margins and reduce dependence on traditional, labor-intensive models.
BGC Group acquired OTC Global Holdings, LP, one of the fastest-growing energy and commodities brokerage firms, in April for $325 million. Moreover, it acquired Sage Energy Partners, LP, an energy and environmental brokerage firm, last year. These buyouts represent an advancement in the company's growth strategy, solidifying the ECS business as the largest asset class within the company. These acquisitions are projected to contribute more than $450 million in annual revenues and have positioned BGC as a major player in the energy sector.
ECS Acquisitions’ Expected Revenue Impact
Image Source: BGC Group Inc.
BGC Group is well-positioned to capitalize on growing environmental and energy transition trends and will keep benefiting from consistent global demand for oil, the single largest source of energy. As such, the company’s top-line growth is anticipated to be impressive. Over the last five years (2019-2024), the company’s revenues recorded a CAGR of 1.5%.
Other than the above-mentioned buyouts, BGC Group acquired ContiCap, Open Energy Group and Trident in 2023. These deals positioned the company as one of the leading global brokerage firms and bolstered its market share.
BGC Group has been prioritizing share repurchases over dividend payouts. The company pays 2 cents per share as a quarterly dividend, which was increased 100% in February 2024. Additionally, in October 2024, the company re-authorized a $400 million share repurchase program. As of Dec. 31, 2024, approximately $350.0 million remained under this authorization.
How to Play BGC Group Stock Ahead of Q1 Earnings
Heightened market volatility, BGC Group’s efforts to diversify its offerings and expansion initiatives to grow market share through acquisitions and organically bode well for its first-quarter results. However, uncertainties regarding tariffs, inflationary pressure, increased regulatory oversight and intense competition keep investors cautious about the company’s growth.
Nonetheless, BGC Group seems to be better placed to confront the near-term challenges and offer robust returns to investors. This makes it a better investment choice. While BGC stock might seem pricey, its premium valuation is justifiable considering the higher growth expectations.
Thus, BGC Group's prospects look promising. Investors must consider adding the stock to their portfolio for attractive returns.