Review of TMX Group Limited

AUG 14, 2025 - Most segments are firing on all cylinders since the company has transitioned into a company with a diverse portfolio of businesses with a heavy emphasis on recurring revenue. X’s businesses possess a favourable competitive position due to the regulatory hurdle acting as a barrier to entry for the company. X is a high-quality dividend grower, the company’s management has demonstrated a disciplined capital allocation track record of shareholder-friendly policies by consistently raising dividends year after year, and implementing M&A in an opportunistic approach, while at the same time maintaining a moderately leveraged balance sheet. Although X’s valuation has expanded to premium multiples and is currently at the highest level compared to previous years. We think the premium valuation is justified given that the data business is growing faster and will quickly become a decent chunk of the overall business. With higher quality in the revenue stream and a stronger margin profile, we think X today deserves a higher multiple. We remain bullish on the long-term outlook for the business, given the momentum. We are upgrading our ratings by one notch to A-.