MarketAxess (MKTX) to Post Q3 Earnings: What's in Store?

MarketAxess Holdings Inc.’s MKTX third-quarter 2020 earnings report is slated for Jul 22. The company is likely to have gained from higher total trading volumes in different categories, such as core products like U.S. high-grade, high-yield, the emerging markets and Eurobonds.

Factors Impacting Q3 Results

The company experienced increased bond trading volumes and market share in the first half of 2020 amid the extreme market dislocation and volatility caused by the pandemic, which led investors to flock to safe haven asset, such as bonds. This  trend is most likely to have continued in the third quarter.

The company is expected to have witnessed strong trading volumes in each of the three months comprising July, August and September on the back of accelerating market share gains, robust credit market volumes and a global shift among dealers and investors toward fixed income trading automation. It is likely to have seen expanded trading volumes in municipal bonds and U.S. treasuries, driven by contribution from the LiquidityEdge acquisition.

Trading commission, a key revenue driver of the company, is expected to have risen on the back of increased credit trading volume and inclusion of U.S. treasury trading commission.

However, the company might have incurred steep operating costs from escalated compensation and benefits, and clearing costs. While the elevation in compensation and benefits might have been due to addition of personnel to support business growth, clearing costs are likely to have shot up on account of inflated open trading volume and inclusion of matched principal treasury trading volume.

Earnings & Revenue Expectations    

The Zacks Consensus Estimate for MarketAxess’s third-quarter earnings of $1.74 per share implies a 22.54% improvement from the prior-year quarter’s reported number. Likewise, the consensus estimate for the period’s sales of $161.15 million suggests 22.5% growth from the year-ago quarter’s reported figure.

Earnings Surprise History

The company boasts an attractive surprise record. Its bottom line beat estimates in each of the last four quarters, the average being 2.49%. This is depicted in the chart below:

MarketAxess Holdings Inc. Price and EPS Surprise

MarketAxess Holdings Inc. Price and EPS Surprise

MarketAxess Holdings Inc. price-eps-surprise | MarketAxess Holdings Inc. Quote

Here is what our quantitative model predicts:

Our proven model does not conclusively predict an earnings beat for MarketAxess this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: MarketAxess has an Earnings ESP of 0.00%.

Zacks Rank: MarketAxess currently has a Zacks Rank #3.

Stocks to Consider

Here are some stocks from the finance sector with the perfect combination of elements to surpass estimates in their upcoming releases.

Cardtronics PLC CATM has an Earnings ESP of +14.41% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Envestnet, Inc. ENV has an Earnings ESP of +2.35% and a Zacks Rank #2.

Green Dot Corporation GDOT has an earnings ESP of +5.88% and a Zacks Rank of 3.

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