MarketAxess Holdings Inc. (MKTX) reported its fourth-quarter 2014 earnings of a record 57 cents per share, outperforming the Zacks Consensus Estimate by 9.6% and improving 39% year over year.
Bottom-line growth was primarily driven by a growing market share as well as record volumes across its core products.
Operational Update
MarketAxess’ total revenue grossed to a record $70.2 million in the reported quarter and was in line with the Zacks Consensus Estimate. Revenues improved 17% year over year stemming from higher commission revenues (up 19.7% year over year), information and post-trade service revenues (up 6.9%) as well as higher other revenues (up 13%).
Total expenses at MarketAxess rose 2.9% to $36.7 million during the reported quarter. The increase was attributable to higher employee compensation and benefits costs (up 15.5%), depreciation and amortization (up 11.4%), and general and administrative expense (up 1.8%).
The company reported pre-tax income of $33.5 million for the fourth quarter, up 35.0% year over year.
Pre-tax margin expanded 670 basis points year over year to 47.7%.
Total trading volume of MarketAxess increased 23.4% from the prior-year quarter to $211.4 billion.
2014 Highlights
MarketAxess reported 2014 earnings of $1.97 per share, up 8.8% from the prior year. However, results missed the Zacks Consensus Estimate by 2.6%.
Total revenue grossed $262.8 million, increasing 10.1% over 2013. Results were almost in line with the Zacks Consensus Estimate.
Financial Update
MarketAxess exited 2014 with total assets of $379.9 million, increasing 7.3% from the 2013-end level.
Total cash and cash equivalents were $168.9 million at the end of 2014, up 27.3% from the 2013-end level.
At 2014 end, MarketAxess had total stockholders’ equity of $334.2 million, up 7.7% from year-end 2013.
As of Dec 31, 2014, capital spending decreased by 36.5% to $14.8 million from year-end 2013.
Dividend Update
MarketAxess’ board of directors increased the quarterly cash dividend to 20 cents per share, which will be paid on Feb 26, 2015 to stockholders of record as on Feb 12, 2015. This quarterly dividend represents an increase of 25% from the prior one.
Share Repurchase Update
Under MarketAxess’ current $100.0 million share repurchase program, the company bought back 0.19 million shares worth $12.5 million in the reported quarter. As of Dec 31, 2014, $62.0 million remained under its authorization.
2015 Guidance
MarketAxess expects 2015 total expenses in the range of $153–$159 million and capital spending in the range of $14–$17 million. The full-year effective tax rate guidance was also expected to be in the range of 36–38%.
Zacks Rank
MarketAxess holds a Zacks Rank #2 (Buy).
Other Stocks to Consider
Investors interested in financial sector can look for Ladder Capital Corp (LADR), CBOE Holdings, Inc. (CBOE) and CME Group Inc. (CME). While Ladder Capital sports a Zacks Rank #1 (Strong Buy), CBOE Holdings and CME Group hold the same Zacks Rank as MarketAxess.
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