Estimates for MarketAxess Holdings Inc. (MKTX - Free Report) have been revised upward over the past 60 days, reflecting analysts' optimism on the stock. The stock has seen the Zacks Consensus Estimate for 2018 and 2019 earnings move 5.9% and 1.4% north, respectively, over the same time frame.
Shares of this Zacks Rank #2 (Buy) company have rallied 13.2% against its industry's decline of 9.6%.
Now, let’s focus on some important factors that make the company an investor favorite.
Growing Top Line: MarketAxess has been witnessing a strong revenue improvement over the past many years, which is evident from it eight-year CAGR of 16.84% (2009-2017). This momentum also continued into the first nine months of 2018 with the metric rising 6.1% year over year. Given its core fundamentals, the company's revenues are likely to sustain the beat streak going forward.
Strategic Initiatives: Over the past many years, the company has expanded its capabilities through a series of acquisitions and partnerships, which enabled it to enter new markets. Some of its significant buyouts and collaborations include the one with Xtrakter Limited, which provided the company with an expanded set of technology solutions, a strategic alliance with BlackRock, Inc., which improved the range of trading connections available to global credit market participants and an agreement with S&P Dow Jones Indices to jointly develop indices that will track the most liquid segments of the U.S. corporate bond market. These transactions expanded the company’s business portfolio, leading to long-term growth.
Global Expansion: The company’s international business has been performing well over the past few quarters. MiFID II continues to have a positive impact on client-training behavior, leading to an increase in volume with European clients, which further drives Eurobond volumes. Growth in the emerging market volume is also impressive. The company now has more than 600 foreign client firms, active on the platform representing a 17% increase in several institutions year over year. Its widening footprint in the international credit rating significantly increases the long-term growth opportunity for its shareholders.
Capital Position: The company boasts a strong capital status and sufficient liquidity, which remain attractive for investors. Notably, it has been generating free cash flow for the past several years. which has paved way for investing in trading platform, new products, geographic expansion and infrastructure. The company is focused on enhancing shareholder value through share buybacks and dividend hikes. In 2018, it raised its dividend by 27%, marking the eighth consecutive increase over the years.
Positive Earnings Surprise History: The company’s earnings exceeded estimates in three of the trailing four reported quarters, the average beat being 3.64%.
Growth Projections: The Zacks Consensus Estimate for current-year earnings is pegged at $4.51, representing a year-over-year increase of 15.6% on 8.8% higher revenues of $432.3 million.
For 2019, the Zacks Consensus Estimate for earnings stands at $5.16 on $485.2 million revenues, translating into a respective 14.6% and 12.2% year-over-year rise.
Other Key Picks
Investors interested in the finance sector can also take a look at some other top-ranked stocks like Cboe Global Markets, Inc. (CBOE - Free Report) , Intercontinental Exchange Inc. (ICE - Free Report) and Total System Services, Inc. (TSS - Free Report) , each carrying a Zacks Rank of 2. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cboe Global operates as an options exchange in the United States. It came up with average four-quarter earnings surprise of 2.63%.
Intercontinental Exchange, Inc. operates regulated exchanges, clearing houses and listings venues for financial and commodity markets in the United States, the United Kingdom, Continental Europe, Asia, Israel and Canada. The company managed to pull off average four-quarter positive surprise of 2.76%.
Total System provides payment processing, merchant and related payment services to financial and nonfinancial institutions worldwide. It has average trailing four-quarter beat of 7.12%.
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