MarketAxess (MKTX) Q4 Earnings Beat Estimates, Improve Y/Y

MarketAxess Holdings Inc.’s (NASDAQ:MKTX) fourth-quarter 2017 earnings per share of 89 cents beat the Zacks Consensus Estimate by 1.14% and grew by the same magnitude year over year.

However, including the effects of 31 cents on account of a one-time charge relating to the Tax Cuts and Jobs Act and 30 cents of excess tax benefits related to a new share-based compensation accounting standard (ASU 2016-09) adopted on Jan 1, 2017, net income came in at 88 cents per share in the fourth quarter.

Operational Update

MarketAxess posted total revenues of $99.6 million, up 5.4% year over year. The improvement can be primarily attributed to a 60% surge in investment income. Commission revenues increased 2.9% while information and post-trade services increased 20% and 36% respectively, and other revenues increased 589% year over year.

MarketAxess Holdings, Inc. Price, Consensus and EPS Surprise

MarketAxess Holdings, Inc. Price, Consensus and EPS Surprise | MarketAxess Holdings, Inc. Quote

Total trading volume increased 5.1% in the reported quarter to $355.6 billion year over year, driven by record trading volume in U.S. high-grade and other credit products.

Total expenses at MarketAxess increased 13.8% from the prior-year quarter to $50.2 million. This rise was due to higher employee compensation and benefit cost, technology and communication costs plus general administrative and occupancy costs.

The effective tax rate for the fourth quarter of 2017 was 32.2% compared with 34.1% for the fourth quarter of 2016.

Financial Update

Total assets were $581.2 million as of Dec 31, 2017, up 10.1% from year-end 2016.

Total cash and cash equivalents were $167 million, down 0.7% from year-end 2016.

Total stockholder’s equity was $514.8 million, up 10% from the end of last year.

Free cash flow totaled $63.5 million, up 23.4% year over year.

Share Repurchase Update and Dividend Hike

MarketAxess made share buyback of $6.1 million in the fourth quarter.
The company's board of directors declared a 27% increase in its quarterly cash dividend to 42 cents per share. The same will be paid on Feb 28, 2018 to stockholders of record as of the close of business on Feb 14, 2018.

Zacks Rank

MarketAxess carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies in the Finance Sector

Among the other firms in the same space that have reported their fourth-quarter earnings so far, American Express Company (NYSE:AXP) , Nasdaq, Inc. (NASDAQ:NDAQ) and Discover Financial Services (NYSE:DFS) beat their respective Zacks Consensus Estimate by 2.6% 1.31% and 3.96%, respectively.

Wall Street’s Next Amazon (NASDAQ:AMZN)

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>