A month has gone by since the last earnings report for MarketAxess (MKTX). Shares have added about 6.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MarketAxess due for a pullback? 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 & Revenues Beat Estimates
MarketAxess Holdings’ earnings per share of $1.96 beat the Zacks Consensus Estimate by 3.7% and also surged 41% year over year.
Revenues of $168.9 million topped the Zacks Consensus Estimate by 0.6% and also rose 36% year over year. Commission revenues increased 38% year over year to $156 million.
All other revenues, comprising information services, post-trade services and other revenues, improved 11% to $13 million.
Total trading volumes expanded 28.8% year over year to $659.7 billion.
Total expenses at MarketAxess were up 27.1% from the prior-year quarter to $77.9 million. This rise was due to higher employee compensation and benefit cost, headcount, technology and communication costs, and clearing costs.
Operating income of $91 million soared 44% year over year owing to rise in revenues, partly offset by elevated costs.
Total assets were $975.6 million as of Mar 31, 2020, up 2.1% from the level as of Dec 31, 2019.
Total cash, cash equivalents and investments were $363.8 million, up 34.7% from the level at 2019 end.
During the quarter, the company generated free cash flow of $52.9 million, up 79.2% year over year.
Share Repurchase and Dividend Update
MarketAxess bought back shares worth $5.4 million in the first quarter.
The company's board of directors declared a quarterly cash dividend of 60 cents per share, which will be paid out on May 27, 2020 to its stockholders of record as of May 13.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 17.73% due to these changes.
Currently, MarketAxess has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise MarketAxess has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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