MarketAxess (MKTX) Gears Up for Q2 Earnings: What’s in Store?

MarketAxess Holdings Inc. MKTX is expected to release its second quarter 2022 results on July 20, before the opening bell.

In the last reported quarter, this leading electronic trading platform operator reported adjusted earnings per share of $1.73, beating Zacks’ consensus estimate of 1.8%, supported by higher trading volumes . This was partially offset by escalating costs.

MarketAxess beat the consensus estimate in three of the previous four quarters and missed once, with the average earnings surprise of 2.5%. This is represented in the graph below:

MarketAxess Holdings Inc. Surprise Price and EPS

MarketAxess Holdings Inc. price-eps-surprise | Listing of MarketAxess Holdings Inc.

Let’s see how things went before the second quarter results announcement.

Trend in revision of estimates

Zacks’ consensus estimate for second-quarter earnings per share of $1.74 saw two moves lower and no upward revisions in the past week. The estimated figure suggests a decrease of 1.7% from the number reported the previous year.

However, the consensus second-quarter revenue estimate of $187.1 million indicates a 6.1% increase from the figure reported a year ago.

Factors to note

Zacks’ consensus estimate for average daily total credit volume for the second quarter is pegged at $12,139 million, indicating a jump from $10,664 million a year ago. The consensus estimate for total commissions shows a 6.4% year-over-year increase.

Zacks’ consensus estimate for total distribution fees is set at $31.4 million, indicating an increase from $29.3 million a year ago. The consensus mark for total transaction fees is set at $134 million, which is an increase from the level of $127 million a year ago.

The projections mentioned above may have boosted MKTX revenue in the second quarter. However, Zacks’ consensus estimate for average variable transaction fee rates per million points to a 4.9% year-over-year decline, which may have affected its profit levels.

In addition, high expenses due to ongoing investments in several areas, including trading platform, new protocols and infrastructure as well as headcount additions, likely put pressure on margins, reducing the bottom line. This makes the pace of earnings uncertain for MKTX in the second quarter.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for MarketAxess this time around. The combination of a positive ESP Earnings and a Zacks rank of #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of beating gains. This is not the case here as you will see below.

ESP Earnings: The company’s earnings ESP is -0.65%, as the most accurate estimate is currently pegged at $1.73 per share, which is below Zacks’ consensus estimate of 1, $74.

You can discover the best stocks to buy or sell before they’re flagged with our Income ESP filter.

Zacks Rank: MarketAxess currently carries a Zacks rank #3.

Actions to consider

While an earnings beat seems uncertain for MarketAxess, here are some companies from the Finance space you might want to consider, as our model shows that these have the right combination of elements to show a beating in profits this time around:

Discover financial services DFS has a +0.53% Earnings ESP and a Zacks Rank of 2. You can see the full list of today’s Zacks #1 Rank stocks here.

Discover Financial’s net income for the quarter ahead is expected to benefit from its strong market position, expansion into the global payments industry and attractive core business. DFS has seen four upward revisions to estimates in the past 60 days, with one in the opposite direction.

American Express Company AXP has a +1.90% earnings ESP and is a #3 rated Zacks player.

Zacks consensus estimate for American Express revenue for the quarter ahead is set at $12.4 billion, implying a 21.1% improvement over the year’s revenue former. AXP has seen two upward revisions to estimates in the past 30 days, with none in the opposite direction.

CME Group Inc. CME has a +0.90% earnings ESP and is a #3 rated Zacks player.

Zacks’ consensus estimate for CME Group’s net income for the quarter ahead indicates a jump of 15.2% from a year ago. The consensus score for CME revenue shows a 3.4% year-over-year increase.

Stay up to date with upcoming results announcements with the Zacks Earnings Schedule.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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