MarketAxess Holdings (NASDAQ: MKTX) and BGC Partners (NASDAQ:BGCP) are both mid-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitabiliy, institutional ownership, earnings, valuation, risk and analyst recommendations.

Dividends

MarketAxess Holdings pays an annual dividend of $1.32 per share and has a dividend yield of 0.6%. BGC Partners pays an annual dividend of $0.72 per share and has a dividend yield of 5.8%. MarketAxess Holdings pays out 35.8% of its earnings in the form of a dividend. BGC Partners pays out 184.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares MarketAxess Holdings and BGC Partners’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MarketAxess Holdings $385.24 million 20.04 $219.89 million $3.69 55.74
BGC Partners $2.62 billion 1.34 $111.12 million $0.39 31.67

MarketAxess Holdings has higher revenue, but lower earnings than BGC Partners. BGC Partners is trading at a lower price-to-earnings ratio than MarketAxess Holdings, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares MarketAxess Holdings and BGC Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MarketAxess Holdings 36.26% 30.39% 27.41%
BGC Partners 4.14% 32.21% 8.14%

Risk & Volatility

MarketAxess Holdings has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500. Comparatively, BGC Partners has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for MarketAxess Holdings and BGC Partners, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MarketAxess Holdings 0 4 2 1 2.57
BGC Partners 0 0 0 0 N/A

MarketAxess Holdings presently has a consensus price target of $179.60, indicating a potential downside of 12.68%. Given MarketAxess Holdings’ higher probable upside, research analysts clearly believe MarketAxess Holdings is more favorable than BGC Partners.

Insider & Institutional Ownership

90.2% of MarketAxess Holdings shares are held by institutional investors. Comparatively, 46.1% of BGC Partners shares are held by institutional investors. 4.5% of MarketAxess Holdings shares are held by company insiders. Comparatively, 37.4% of BGC Partners shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

MarketAxess Holdings beats BGC Partners on 11 of the 16 factors compared between the two stocks.

MarketAxess Holdings Company Profile

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.

BGC Partners Company Profile

BGC Partners, Inc. (BGC) is a global brokerage company servicing the financial and real estate markets. The Company operates through two segments: Financial Services and Real Estate Services. It provides a range of services, including trade execution, broker-dealer services clearing, trade compression, post trade, information, and other back-office services to a range of financial and non-financial institutions. Its integrated platform is designed to provide flexibility to customers with regard to price discovery, execution and processing of transactions, and enables them to use voice, hybrid, or in various markets, electronic brokerage services in connection with transactions executed either over-the-counter or through an exchange. Through the Company’s FENICS, Lucera, BGC Trader, BGC Market Data and Capitalab brands, it offers electronic brokerage, financial technology solutions, market data, post-trade services, and analytics related to select financial instruments and markets.

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