Should You Buy MarketAxess Holdings Inc. (NASDAQ:MKTX) When Prices Drop?

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MarketAxess Holdings Inc. is a financially healthy and robust stock with a proven track record of outperformance. We all know MarketAxess Holdings, and having this large-cap to cushion your portfolio during a volatile period in the stock market isn’t a bad idea. Today I will give a high-level overview of the stock, and why I believe it’s still attractive.

See our latest analysis for MarketAxess Holdings

MarketAxess Holdings Inc., together with its subsidiaries, operates an electronic trading platform that enables fixed-income market participants to trade corporate bonds and other types of fixed-income instruments worldwide. Formed in 2000, and headed by CEO Richard McVey, the company size now stands at 454.00 people and with the market cap of US$13b, it falls under the large-cap group. Typically, large companies are well-established and highly resourced, meaning that stock market volatility may impact some short-term strategic decisions but unlikely to matter in the long run. Therefore, large-cap stocks are a safe bet to buy more of when the general market is selling off.

NasdaqGS:MKTX Historical Debt, June 24th 2019
NasdaqGS:MKTX Historical Debt, June 24th 2019

With zero debt on its balance sheet, MarketAxess Holdings isn’t constrained to debt obligations and covenants, which can be burdensome during financial downturns. Highly-levered companies have to maintain a cash cushion to meet near-term interest payments as well as meet unforeseen circumstances. With no lenders’ needs to tend to, MarketAxess Holdings enjoys financial flexibility and independence – an invaluable position to be in during bear markets. Its current cash position of US$345m is enough to meet near-term liabilities, placing it in a financially robust standpoint in the face of uncertainty.

NasdaqGS:MKTX Income Statement, June 24th 2019
NasdaqGS:MKTX Income Statement, June 24th 2019

MKTX’s annual earnings growth rate has been positive over the last five years, with an average rate of 20%, overtaking the industry growth rate of 16%. It has also returned an ROE of 28% recently, above the industry return of 24%. This continuous market outperformance demonstrates a strong track record of delivering robust returns over many years, raising my confidence in MarketAxess Holdings as a long-term hold.

Next Steps:

MarketAxess Holdings makes for a robust long-term investment based on its scale, financial health and track record. Remember, in bear markets, sell-offs can be unjustified. Ask yourself, has anything really changed with MarketAxess Holdings? If not, then why not scoop it up at a discount? Lining your portfolio with a few well-established companies can reduce your risk and help you scale your wealth in the long run. One thing you should remember though, is to do your homework. Do your own research, come up with your point of view. Below is a list I’ve put together of other things you should consider before you buy:
  1. 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.
  2. Valuation: What is MKTX worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MKTX is currently mispriced by the market.
  3. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.