Measuring MarketAxess Holdings Inc.’s (NASDAQ:MKTX) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess MKTX’s recent performance announced on 30 June 2019 and compare these figures to its historical trend and industry movements.
Were MKTX’s earnings stronger than its past performances and the industry?
MKTX’s trailing twelve-month earnings (from 30 June 2019) of US$185m has jumped 19% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 19%, indicating the rate at which MKTX is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and if the entire industry is feeling the heat.
In terms of returns from investment, MarketAxess Holdings has invested its equity funds well leading to a 28% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 22% exceeds the US Capital Markets industry of 1.2%, indicating MarketAxess Holdings has used its assets more efficiently. However, its return on capital (ROC), which also accounts for MarketAxess Holdings’s debt level, has declined over the past 3 years from 38% to 30%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research MarketAxess Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MKTX’s future growth? Take a look at our free research report of analyst consensus for MKTX’s outlook.
- Financial Health: Are MKTX’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.