MKTX Investment Analysis Report & Stock Research, MarketAxess Holdings, Inc.

Ockham's Rating/Recommendation Summary

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MKTX Revenue

Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 7 years. For, MKTX the high and low end of the Price to Sales per share ratios are 6.12x and 2.94x respectively.

Notice that MKTX's current Price to Sales per share ratio is 4.70x, which is slightly above its historical average. This level of Price to Sales gives us a fairly neutral position on the shares. We would like to see a drop in the Price to Sales ratio of 3% given current sales figures before we would become more positive on a Price to Sales basis. Such a drop would put Price to Sales per share in line with MKTX's weighted historical average.

MKTX Cash Earnings

Looking at MKTX specifically in their Cash Earnings capabilities, Ockham views MKTX as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for MKTX, the current level of Cash Earnings compared to its historical levels helps identify where MKTX is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 59.69 and a historical low Cash Earnings per share ratio of 28.67, an investor can relate where value becomes optimal.

Now that MKTX’s current price is $15.47 and its Price to Cash Earnings ratio is 33.63, we are very positive on its outlook from the cash earnings perspective. In fact, MKTX is now trading a full 24% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why MKTX has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.

MKTX Dividends

A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely.

The estimated annual dividend for MKTX is $0.28 producing a current dividend yield of 1.81%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from MKTX against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from MKTX over previous years was 3.90% while the lowest dividend yield was 0.00%. The current dividend yield is below the historical median, which is slightly off-putting. We are a bit adverse to MKTX from this valuation metric.