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Last update on 2024-06-06

MarketAxess Holdings (MKTX) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

MarketAxess Holdings (MKTX) achieved a 4/9 in 2023 Piotroski F-Score for profitability, liquidity, and operational efficiency. Explore the in-depth analysis here.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 4

We're running MarketAxess Holdings (MKTX) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The Piotroski F-Score for MarketAxess Holdings (MKTX) is 4 out of 9. MKTX scores positively on net income, cash flow, relative cash flow, and leverage reduction. However, it fails on ROA growth, current ratio improvement, share dilution, gross margin growth, and asset turnover ratio. Historically, the company has shown strengths in profitability and cash flow but faces recent challenges in efficiency and liquidity indicators.

Insights for Value Investors Seeking Stable Income

Given the Piotroski F-Score of 4, MarketAxess Holdings (MKTX) shows mixed signals. A score of 4 indicates that the company is relatively mediocre. As an investor, you may want to exercise caution and consider looking into other stocks with stronger financial health and operational efficiency. It might be beneficial to monitor MKTX for any improvements in its financial metrics before making a decision.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of MarketAxess Holdings (MKTX)

Company has a positive net income?

Net income indicates a company's profitability, and a positive number usually means financial health and operational efficiency.

Historical Net Income of MarketAxess Holdings (MKTX)

MarketAxess Holdings (MKTX) reported a net income of $258,055,000 in 2023, reflecting a positive profit for the year. Historically, the company has consistently recorded positive net incomes over the past two decades, showcasing its ability to generate profit across different market conditions. This consistent profitability trend solidifies the company's position as a strong and reliable player in the industry. Given that the net income is positive for 2023, according to the Piotroski score criteria, MarketAxess earns a point for this metric.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the actual cash generated by a company's core operation.

Historical Operating Cash Flow of MarketAxess Holdings (MKTX)

MarketAxess Holdings (MKTX) reported a positive CFO of $333.77 million in 2023. This signifies a solid operational performance and cash-generating ability. Over the past 20 years, the operating cash flow has displayed a consistent upward trend, growing from $17.16 million in 2003 to $333.77 million in 2023. This positive and consistent growth in CFO underlines the company's robust operational efficiency and effectiveness. For this criterion, MarketAxess Holdings (MKTX) receives 1 point.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) evaluates a company's efficiency in generating profits from its assets, showing its management effectiveness.

Historical change in Return on Assets (ROA) of MarketAxess Holdings (MKTX)

MarketAxess Holdings (MKTX) reported a Return on Assets (ROA) of 0.1425 in 2023, which is a decline from the ROA of 0.1595 in 2022. Therefore, they will not add a point (score of 0) for this criterion. While this may seem disappointing, it's important to contextualize it within the industry's performance. The industry median ROA was 0.3479 in 2023, significantly higher than that of MKTX. Considering over the past 20 years, MarketAxess Holdings has generally followed a more robust growth trajectory in terms of operating cash flow, reaching $333.77 million in 2023, its highest yet. Still, the decrease in ROA highlights a need for enhanced efficiency in utilizing their asset base.

Operating Cashflow are higher than Netincome?

Operating Cash Flow (OCF) assesses a company's cash generation efficiency from its core business operations, greater OCF than Net Income indicates efficient cash management devoid of accounting manipulations.

Historical accruals of MarketAxess Holdings (MKTX)

In 2023, MarketAxess Holdings (MKTX) reported an Operating Cash Flow (OCF) of $333,767,000 while its Net Income stood at $258,055,000. The fact that OCF exceeds Net Income by about $75,712,000 is a positive signal, suggesting the company's core operations are generating ample cash relative to its accounting net income, a trend evident over the last 20 years. Such a situation showcases effective cash management and operational efficiency, adding 1 point to the Piotroski score.

Liquidity of MarketAxess Holdings (MKTX)

Leverage is declining?

Change in leverage examines how a company's debt levels relative to its equity have changed over time, indicating risk and financial health.

Historical leverage of MarketAxess Holdings (MKTX)

For MarketAxess Holdings (MKTX), the leverage ratio decreased from 0.0514 in 2022 to 0.0395 in 2023, accruing 1 point in the Piotroski analysis. Historically, MKTX's leverage ratio has fluctuated. Initially, from 2003 to 2013, leverage was virtually non-existent. It first arose significantly in 2019 at 0.1026 and gradually fell to 0.0395 by 2023. This decreasing trend signifies a reduction in financial risk and a healthier balance sheet, potentially enhancing investor confidence and reducing the company's vulnerability to economic shocks.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay off its short-term liabilities with its short-term assets.

Historical Current Ratio of MarketAxess Holdings (MKTX)

For MarketAxess Holdings (MKTX), the Current Ratio has decreased from 2.7611 in 2022 to 2.31 in 2023, indicating a decline. Therefore, MKTX does not receive a point for this criterion. Over the last two decades, MKTX's Current Ratio has generally been high compared to the industry median, although a decreasing trend is notable from a peak of 17.59 in 2015 to the current 2.31. This decrease suggests potential liquidity issues, especially when compared to the industry median of 1.8292 in 2023.

Number of shares not diluted?

Change in shares outstanding is important as it reflects corporate actions like share buybacks or dilution due to new share issuance. A decrease is generally viewed positively by investors as it indicates buybacks and a potential earnings boost per share.

Historical outstanding shares of MarketAxess Holdings (MKTX)

For MarketAxess Holdings (MKTX), the Outstanding Shares increased slightly from 37,468,000 in 2022 to 37,546,000 in 2023. This indicates a marginal increase of 78,000 shares. Examining the historical data over the last 20 years, there is a general trend of slow but steady increase in outstanding shares, with occasional small decreases. The fact that MKTX issued more shares in 2023 means that it does not meet the criterion for a point in Piotroski Analyses, reflecting a score of 0 for this specific indicator. Over the years, the most notable period of significant increase was between 2007 and 2009, likely due to actions taken during the financial crisis. Overall, this recent increment is minor and may not significantly impact per-share metrics but does reflect that the company is not engaging in significant buyback activity recently.

Operating of MarketAxess Holdings (MKTX)

Cross Margin is growing?

Change in Gross Margin refers to the variation in the percentage of revenue that exceeds the cost of goods sold (COGS) over a specified period. It is a crucial metric because it indicates how efficiently a company is producing its goods relative to its revenues. A higher gross margin suggests better efficiency and profitability.

Historical gross margin of MarketAxess Holdings (MKTX)

For MarketAxess Holdings (MKTX), the gross margin in 2023 is 0.725, which decreased from 0.7465 in 2022. This reflects a deterioration in operational efficiency and profitability. Gross margin is down by 2.86%, indicating challenges in cost management or pricing strategies. Despite a historically high gross margin trend, outperforming the industry median consistently, this decline could be a red flag that warrants further investigation. Therefore, for the Piotroski Score, this results in 0 points, given the decrease in gross margin.

Asset Turnover Ratio is growing?

Change in asset turnover assesses the company's efficiency in using its assets to generate sales.

Historical asset turnover ratio of MarketAxess Holdings (MKTX)

MarketAxess Holdings (MKTX)'s Asset Turnover has declined from 0.4578 in 2022 to 0.4154 in 2023. This reduction in Asset Turnover suggests a decreased efficiency in utilizing its assets to generate revenue, meriting a score of 0 for this criterion. The downward trend in Asset Turnover over the past two decades, peaking at rates as high as 1.2101 in 2003, shows a long-term decrease in asset efficiency.


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