MarketAxess Holdings (NASDAQ: MKTX) and CME Group (NASDAQ:CME) are both mid-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, earnings, analyst recommendations and profitabiliy.
Analyst Recommendations
This is a breakdown of recent recommendations and price targets for MarketAxess Holdings and CME Group, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| MarketAxess Holdings | 0 | 2 | 2 | 1 | 2.80 |
| CME Group | 0 | 2 | 4 | 0 | 2.67 |
MarketAxess Holdings presently has a consensus price target of $192.40, suggesting a potential downside of 2.55%. CME Group has a consensus price target of $131.33, suggesting a potential upside of 5.27%. Given CME Group’s higher probable upside, analysts plainly believe CME Group is more favorable than MarketAxess Holdings.
Dividends
MarketAxess Holdings pays an annual dividend of $1.32 per share and has a dividend yield of 0.7%. CME Group pays an annual dividend of $2.64 per share and has a dividend yield of 2.1%. MarketAxess Holdings pays out 34.6% of its earnings in the form of a dividend. CME Group pays out 54.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Insider & Institutional Ownership
90.1% of MarketAxess Holdings shares are held by institutional investors. Comparatively, 83.3% of CME Group shares are held by institutional investors. 4.5% of MarketAxess Holdings shares are held by company insiders. Comparatively, 0.6% of CME Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Profitability
This table compares MarketAxess Holdings and CME Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| MarketAxess Holdings | 37.46% | 30.38% | 27.43% |
| CME Group | 46.05% | 7.61% | 2.20% |
Earnings and Valuation
This table compares MarketAxess Holdings and CME Group’s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| MarketAxess Holdings | $385.91 million | 19.20 | $219.16 million | $3.81 | 51.82 |
| CME Group | $3.61 billion | 11.70 | $2.52 billion | $4.89 | 25.51 |
CME Group has higher revenue and earnings than MarketAxess Holdings. CME Group is trading at a lower price-to-earnings ratio than MarketAxess Holdings, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
MarketAxess Holdings has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500. Comparatively, CME Group has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500.
Summary
MarketAxess Holdings beats CME Group on 9 of the 17 factors compared between the two stocks.
About MarketAxess Holdings
MarketAxess Holdings Inc. operates an electronic trading platform that enables fixed-income market participants to trade corporate bonds and other types of fixed-income instruments using its trading technology. Institutional investor and broker-dealer firms are users of trading platform, accessing global liquidity in the United States corporate bonds, emerging markets and high-yield bonds, European bonds, the United States agency bonds, municipal bonds, credit default swaps and other fixed-income securities. Through Open Trading protocols, it executes trades in certain bonds between and among institutional investor and broker-dealer clients in a trading environment on a matched principal basis. It offers trading-related products and services, including market data to assist clients with trading decisions; connectivity solutions that facilitate straight-through processing; technology services to optimize trading environments, and execution services for exchange-traded fund managers.
About CME Group
CME Group Inc., through its exchanges, provides products across all asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The Company’s segment primarily consists of the Chicago Mercantile Exchange Inc. (CME), Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. (NYMEX) and Commodity Exchange, Inc. (COMEX) exchanges. The Company provides electronic trading around the globe on its CME Globex platform. The Company also offers clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives through its clearinghouses CME Clearing and CME Clearing Europe. It also provides hosting, connectivity and customer support for electronic trading through its co-location services. The Company’s CME Direct platform offers side-by-side trading of exchange-listed and privately negotiated markets.
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