Why MarketAxess Holdings Stock Jumped 13.6% in February

The trading platform is advancing its beachhead in the massive U.S. bond market.

Joe Tenebruso
Joe Tenebruso
Mar 7, 2019 at 11:57AM
Financials

What happened

Shares of MarketAxess Holdings (NASDAQ:MKTX) leapt nearly 14% last month, according to data provided by S&P Global Market Intelligence, after the leading electronic fixed-income investment trading platform delivered strong fourth-quarter results and boosted its dividend.

So what

MarketAxess Holdings' fourth-quarter revenue rose 14.1% to $112.4 million, while its earnings per share surged 37.5% to $1.21. Both of those figures came in well ahead of Wall Street's estimates; analysts had expected revenue of $110.7 million and EPS of $1.15.

The gains were fueled by a 24.4% rise in trading volume, to $442.3 billion. This includes a 96.5% surge in volume on MarketAxess' Open Trading platform -- which offers traders a cost-effective way to transact anonymously -- to $117.5 billion.

Better still, MarketAxess continues to gain share in the $40 trillion U.S. bond market. The company's share of the U.S. high-grade market rose to 19.3% in the fourth quarter, up from 17.6% in the year-ago period. Its share of the U.S. high-yield market also improved, rising to 10.9% from 6.3%.

Check out the latest earnings call transcript for MarketAxess.

People working at a trading desk.

Bond traders are flocking to MarketAxess' electronic trading platform. Image source: Getty Images.

Now what

Management is committed to returning a sizable portion of MarketAxess' profits to shareholders. The company boosted its quarterly cash dividend by 21% to $0.51 per share. Its board of directors also authorized a new $100 million share repurchase program, which is expected to begin in April.

Moreover, MarketAxess remains well positioned to benefit from the trend toward electronic trading. With its shares pulling back about 6% so far in March, long-term investors may want to use the stock's recent dip as a buying opportunity.