TMX Group’s Q2 Profit Beats Estimates; Shares Rise 6%

Shares of TMX Group Ltd. (X) rose nearly 6% on Thursday after the company posted double-digit profit and revenue growth in the second quarter of 2021. The Canadian financial services company operates the Toronto Stock Exchange (TSX).

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Revenue for Q2 2021 came in at C$245 million, an increase of 13% from the revenue of C$217.7 million reported in Q2 2020.

Meanwhile, the company reported a profit of C$77.3 million (C$1.37 per diluted share) in the second quarter, up 14% from C$67.8 million (C$1.19 per share) in the same quarter a year earlier. (See TMX Group Ltd. charts on TipRanks)

On an adjusted basis, TMX earned C$107.1 million (C$1.90 per diluted share), compared to C$86.6 million (C$1.52 per diluted share) in the second quarter of 2020. Analysts were expecting C$1.72.

TMX Group’s CEO John McKenzie said, “The first half of the year featured strong performances in several growth areas and served to showcase the tremendous efforts of TMX’s people to meet the increased demands of a thriving marketplace in serving the needs of our clients. Our results reflect the depth and strength in our business model with overall growth in revenue and earnings per share compared with the first six months of 2020, including increased revenue in each of our operating segments.

“Looking forward, we remain firmly committed to working with our stakeholders in continuous support of the long-term, sustainable success of our capital markets ecosystem and to further expanding our global client base.”

David Arnold, TMX’s CFO, said that while equity trading volumes declined in the second quarter, TMX continued to see very strong capital raising activity and an increase in its derivative trading volumes.

On July 22, RBC Capital analyst Geoffrey Kwan maintained a Hold rating on the stock, with a C$158.00 price target. This implies 10.5% upside potential.

Overall, TMX stock scores a Hold consensus rating based on one Buy and four Holds. The average TMX Group price target of C$209.98 implies 48% upside potential to current levels.