Q: TMX Group seems to enjoy the monopoly in Canada. Do you like the Co. for Income and Growth ?
Does the Co benefit from volatility in markets ?
How is the current valuation and is it a decent entry level ?
What are street estimates ?
Thank you
Does the Co benefit from volatility in markets ?
How is the current valuation and is it a decent entry level ?
What are street estimates ?
Thank you
5i Research Answer:
We like it quite a lot, and yes it does have a quasi-monopoly. There are competing exchanges, but liquidity is an advantage for X. Volatility does increase trading and this is positive for the company. However, at the same time volatility can decrease the number of IPOs, and IPOs are very high margin for the exchange. So there is a trade off here. We would be very comfortable buying it. It gets a premium valuation of 27X earnings and this is currently skewed towards the high end of its historical range. But growth is still decent and steady. The dividend was raised in February. It reports May 5, estimates 49c EPS and $406.6M revenue.