Is Now the Right Moment for Tradeweb Markets After Recent 3.6% Share Price Rise?

• Ever wondered whether Tradeweb Markets is trading at a bargain or a premium? You are not alone in questioning if now is the right time to buy, hold, or watch from the sidelines.
• Lately, Tradeweb Markets has seen its shares tick up 3.6% over the past week and 1.9% in the last month. However, it's still down 16.9% year-to-date and off 15.5% from a year ago, despite an impressive 89.8% gain over three years.
• Much of the recent movement follows headlines about shifts in global trading volumes and the evolving role of electronic marketplaces, sectors where Tradeweb makes its mark. News of expanding product offerings and further digitalization in markets has also kept investors talking, offering context for those eye-catching price swings.
• If you are wondering about value, Tradeweb Markets scored a 0 out of 6 on our undervaluation checks, meaning it did not come up undervalued in any area. As we dig in, you will see there are a variety of ways to approach valuation, and an even smarter lens we will cover at the end.

Tradeweb Markets scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Tradeweb Markets Excess Returns Analysis

The Excess Returns valuation model examines how effectively a company puts its capital to work by measuring profits generated over and above the required return for investors. This approach sheds light on sustainable value creation by focusing on long-term returns on equity and the company’s capacity to grow its intrinsic worth.

For Tradeweb Markets, key metrics from this model include a Book Value of $29.43 per share and a projected Stable Book Value of $31.82 per share, based on estimates from three analysts. The Stable EPS, driven by weighted future Return on Equity forecasts from five analysts, stands at $4.04 per share. With an Average Return on Equity of 12.70% and a Cost of Equity at $2.59 per share, Tradeweb generates an Excess Return of $1.45 per share. This indicates it earns more than what investors typically require for taking on its level of risk.

Based on these factors, the Excess Returns model calculates an intrinsic value that is 77.7% lower than the current share price. This signals a significant overvaluation. While Tradeweb is delivering above-average returns on equity, the market appears to be pricing in much higher expectations than current fundamentals support.

Result: OVERVALUED

Our Excess Returns analysis suggests Tradeweb Markets may be overvalued by 77.7%. Discover 872 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Tradeweb Markets.

Approach 2: Tradeweb Markets Price vs Earnings

For established and profitable companies like Tradeweb Markets, the Price-to-Earnings (PE) ratio is a widely accepted valuation metric. It measures how much investors are willing to pay for each dollar of earnings and serves as a quick gauge for comparing the relative value of similar businesses. Typically, a higher PE ratio reflects expectations of stronger future growth, while a lower ratio may point to slower growth prospects or greater uncertainty. Risk, profit margins, and the broader market environment also play major roles in what constitutes a "fair" PE for a particular stock.

Currently, Tradeweb Markets trades at a PE ratio of 37x. This is notably above both the Capital Markets industry average PE of 24.2x and the peer group average of 27.6x. While this might suggest the stock is expensive compared to most of its industry and direct competitors, it is important to account for Tradeweb’s specific growth outlook and competitive position.

This is where Simply Wall St's "Fair Ratio" comes into play. Unlike basic peer or industry multiples, the Fair Ratio incorporates a proprietary blend of factors including the company’s future earnings growth, profit margins, risks, industry nuances, and its overall market cap. For Tradeweb, the Fair Ratio stands at 16.7x. Because this ratio already considers the company’s positive attributes, it provides a more tailored benchmark than simply looking at industry averages.

Comparing the actual PE ratio of 37x to the Fair Ratio of 16.7x, Tradeweb trades at a significant premium. This indicates investors are pricing in much higher growth or lower risk than the fundamentals and market context justify.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1401 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Tradeweb Markets Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a user-generated story that connects the numbers, such as future revenue, profit margins, and estimated fair value, to your own view of a company’s prospects. Instead of relying only on one-size-fits-all models or consensus targets, Narratives let you attach your personal assumptions and forecasts directly to Tradeweb Markets. This makes the "why" behind your valuation clear and actionable.

On Simply Wall St's Community page, millions of investors already use Narratives to translate their outlooks into fair value calculations. Narratives make it easy for anyone to articulate how changes in the business, industry, or market sentiment could influence future results. You can then instantly see whether the current price offers an attractive buying or selling opportunity, based on your own logic (not just the consensus).

What is powerful about Narratives is that they adapt dynamically whenever key information changes, such as earnings surprises or new product launches. For example, one investor may build a bullish Narrative for Tradeweb around rapid international expansion and margin improvements, projecting a fair value near $210 per share. Another may expect fee compression and market competition to limit upside, leading to a more cautious target of $118. Narratives help investors weigh these different perspectives, guide their decisions, and stay in control as conditions evolve.

Do you think there's more to the story for Tradeweb Markets? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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