TMX Posts Double-Digit Increases in Profit, Revenue

TMX Group LTD (X) missed estimates for the third quarter despite posting double-digit profit and revenue growth.

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The Canadian financial services company operates the Toronto Stock Exchange (TSX). (See Insiders’ Hot Stocks on TipRanks)

Revenue & Earnings

Revenue for Q3 2021 came in at C$231.3 million, an increase of 11% from the revenue of C$207.6 million reported in Q3 2020. The company benefitted from increased trading activity.

Meanwhile, the company reported a profit of C$76.9 million (C$1.36 per diluted share) in the third quarter, up 10% from C$70 million (C$1.23 per share) in the same quarter a year earlier.

On an adjusted basis, TMX earned C$88.7 million (C$1.57 per diluted share), compared with C$80 million (C$1.40 per diluted share) in the third quarter of 2020. Analysts expected TMX to report C$1.59 per diluted share in adjusted earnings on C$232 million in revenue, according to financial data firm Refinitiv.

TMX Group CEO John McKenzie said, “We are extremely pleased with TMX’s strong performance in the quarter, as we achieved double-digit top and bottom line growth with contributions from across the enterprise, including capital formation, derivatives and Trayport. Along with sustained, positive momentum in our capital markets ecosystem, TMX also marked significant milestones in our initiatives during the third quarter, designed to bolster our ability to serve new and existing clients and to expand the global reach of Canada’s markets into the future.

“In August, we completed the acquisition of AST Canada to augment TSX Trust’s service offering, and in September, Montreal Exchange launched derivatives trading on Asia Pacific time.”

David Arnold, TMX CFO, said that TMX continued to see strong capital raising activity and growth in its data and analytics business, as well as a recovery in its derivative trading volumes in Q3 2021.

Wall Street’s Take

On October 30, TD Securities analyst Graham Ryding maintained a Buy rating on the stock, with a C$160 price target. This implies 19.6% upside potential.

Overall, TMX stock scores a Strong Buy consensus rating based on three Buys and one Hold. The average TMX Group price target of C$157.01 implies 17.4% upside potential to current levels.