On Dec 10, 2014, shares of MarketAxess Holdings Inc. (MKTX) scaled a new 52-week high of $69.85, buoyed by robust third-quarter 2014 results and efficient capital deployment.
In Oct 2014, MarketAxess reported third-quarter earnings that grew year over year, mainly banking on improved market condition and growth in Open Trading. Favorable market conditions, particularly in Europe, are expected to help the company fare well going ahead.
Moreover, as per management, the improved market volatility during the onset of the fourth quarter is expected to aid the company by capitalizing on the favorable bond trading trend. Although third-quarter earnings missed the Zacks Consensus Estimate, this fixed-income trading exchange operator delivered positive earnings surprise in one of the last two quarters, with an average beat of 0.05%. In fact, the company’s shares rallied nearly 13% to close at $68.90 in the last trading session, following the third-quarter announcement.
The top line also showed significant improvement. Although expenses increased in the quarter, a higher-than-expected increase in revenues had managed to offset the rise in expenses, signaling considerable margin expansion.
Moreover, MarketAxess’ one-year return of 3.4% was higher than that of other industry players like Intercontinental Exchange, Inc. (ICE), Deutsche Boerse AG (DBOEF) and ASX Ltd. (ASXFY) that recorded returns of 2.22%, -4.54% and -11.13%, respectively.
Moreover, the company boasts an efficient capital deployment strategy. During the third quarter of 2014, MarketAxess approved a $65 million increase in its share repurchase program, taking the total to $100 million. At the end of the quarter, the company was left with $74.6 million worth of shares to be repurchased.
MarketAxess also engages in regular dividend payouts. With a strong balance sheet, we expect the company to engage in more such endeavors in the future that will in turn boost investor confidence as well as prove accretive to share price appreciation.
Currently, MarketAxess carries a Zacks Rank #3 (Hold).
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