MARKETAXESS HOLDINGS INC. (MKTX): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/MKTX

Headline

Field	Value
Ticker	MKTX
Company	MARKETAXESS HOLDINGS INC.
Current price	$124.73/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	fee-financial
Implied earnings growth	-2.3%
Price-to-earnings	17.2x
Earnings yield	5.8%

Solve inputs: computed at a 8.5% cost of equity with 4% terminal growth over a 5-year stage, on a 5-year median GAAP earnings base; each 1pp of cost of equity moves the implied earnings growth ~4.7pp.

How unusual the bet is: within-range

Reference	Value
vs own history	-1.09σ
cohort percentile (of 51 peers)	29
implied end-window share	0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	1.32x	5	expensive
Earnings	1.44x	5	expensive
Relative	1.17x	4	expensive
Growth	0.99x	4	justifies

Families that justify the price: Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.8%); the inversion above states its own rate.

Per-Model Detail (n=18)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$182.38	0.68x	yes	FCF base $0.3B, growth 7% (input: historical growth), terminal g 4.0%, WACC 8.8%, 6yr projection
DCF Exit Multiple	Growth	$140.61	0.89x	yes	Exit EV/EBITDA: 7.9x / 9.9x / 11.9x (bear / base = today's held flat / bull), 6yr
Relative Valuation	Relative	$112.08	1.11x	yes	P/E 12x (static sector reference · 2026-04), scenarios: 10.0x / 12.0x / 14.0x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	$113.84	1.10x	yes	Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess Return	Asset	$94.54	1.32x	yes	BV/sh $33.64, ROE (TTM) 26.0%, ke 9.3%
Two-Stage Excess Return	Asset	$160.03	0.78x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$98.88	1.26x	yes	Rev $0.9B, growth 7% (input: historical growth; tapered), Terminal P/S: 4.2x / 5.1x / 5.9x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$101.28	1.23x	yes	EPS $8.44, growth 1% (input: historical EPS growth), PEG=11.39 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$82.50	1.51x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.33B × (1−25%) / WACC 8.8% → EPV (no growth)
Residual Income	Asset	$140.75	0.89x	yes	BV $33.64 + 5yr PV of (ROE (TTM) 26.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham Number	Asset	$79.93	1.56x	yes	√(22.5 × EPS $8.44 × BVPS $33.64) — Graham's conservative floor
EV/EBITDA Relative	Relative	—	—	no	—
FCF Yield	Earnings	$86.90	1.44x	yes	FCF $270.6M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$76.32	1.63x	yes	SBC-adj FCF $0.24B (FCF $0.27B − SBC $0.03B) capitalized at Kₑ
Ben Graham Formula	Earnings	$272.33	0.46x	yes	EPS $8.44 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$27.72	4.50x	yes	BV $33.64 × (ROIC 7.3% / WACC 8.8%)
P/Sales Sector	Relative	$73.85	1.69x	yes	Revenue $0.87B × sector P/S 3.0x
PEG Fair Value	Relative	$316.50	0.39x	yes	EPS $8.44 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$91.24	1.37x	yes	EPS $8.44 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net cash	$149.1m
Net debt / NOPAT (after-tax)	-0.56x (net cash)
Net debt / operating income (pre-tax)	-0.42x (net cash)
Interest coverage	85.1x
Share count CAGR (buyback)	-1.7%
Burning cash	no

Bullet Takeaways

• MarketAxess runs an electronic platform for trading corporate and emerging-market bonds, a capital-light fee business with a 52% EBITDA margin and a return on equity around 26%, so it earns far more on each dollar of equity than a typical financial.
• The stock has de-rated to roughly seventeen times earnings, a level that prices the fee stream to shrink slightly rather than grow, even though first-quarter credit trading volume rose 17% and revenue grew 12%.
• The biggest risk is structural fee pressure: the fast-growing portfolio-trading protocol is, in the company's own words, "generally provided under a lower-fee structure than other protocols," so winning more volume can come at a lower blended fee.

Bull Case

Take the bear's strongest punch first. The fear on MarketAxess is that competition has stalled its growth and that the stock deserves its de-rating from former glory to roughly seventeen times earnings. Then look at the volumes. First-quarter credit commission revenue grew 9% on a 17% increase in total credit trading volume, total revenue rose 12% to $233.4 million, and the firm posted record block-trading and portfolio-trading activity, with portfolio trading average daily volume up 51% to a record $1.9 billion. A platform losing the war does not set volume records across its newest protocols. The growth slowed; it did not stop, and the price now assumes the wrong one of those two.

The business model is the durable part. MarketAxess is capital-light: it owns a network, not a balance sheet of loans, so it converts revenue to profit at a rate most financials cannot touch. The first quarter ran a 52.1% EBITDA margin and produced trailing free cash flow of $316 million, on a return on equity around 26%. The 10-K names the moat directly: a "Deep and Differentiated Liquidity Pool Comprised of Leading Institutional Investors, Broker-Dealers and Other Market Participants." Electronic bond trading is a network business, where liquidity attracts liquidity, and the incumbent with the deepest pool has a structural pull that is hard for a challenger to break.

The diversification is the underappreciated leg. Growth in product areas outside U.S. credit ran 20% in the quarter, services revenue grew 10%, and the firm holds a net cash position with interest coverage so high that solvency is simply not a question. Management guided to full-year EPS of about $8.23, and the share count has been declining as the company returns its abundant cash. The bull case is that the market is pricing a high-return, net-cash, network-effect compounder as if its growth had ended, when the most recent quarter shows volume accelerating in exactly the protocols and geographies that were supposed to be its weakness.

Bear Case

The fragility in MarketAxess is not its balance sheet, which is pristine, net cash with enormous interest coverage. It is the structure of its revenue, where the very growth the bull celebrates can quietly erode the economics. The company concedes the mechanism in its own filing: portfolio trading "is generally provided under a lower-fee structure than other protocols and the growth of portfolio trading on our platform will likely h"urt blended fee capture. So the record 51% jump in portfolio-trading volume is double-edged. The protocol winning share is the cheaper one, which means trading volume can grow faster than commission revenue, and a fee business whose mix shifts toward its lowest-margin product is running up a down escalator.

The competitive threat is the second structural risk, and it is named and larger. The 10-K warns that if competitors "increase their market share, our competitive position and therefore our business, financial condition and results of operations may be materially adversely affected," and notes that "many of our current and potential competitors are more established and substantially larger than we are." Electronic credit trading is a contested arena with deep-pocketed rivals, and the network effect that protects an incumbent in one protocol does not automatically transfer to the next. The de-rating to roughly seventeen times earnings is the market's read that the company's share gains have slowed against those rivals, and the price already reflects skepticism that the historical growth rate returns.

The earnings frame makes the stakes concrete. As a capital-light fee business, MarketAxess is worth the fee earnings it throws off, and at about a 6% earnings yield the price implies those earnings drift down roughly 3% a year. That is not a demanding bar, which is the point: the market is no longer paying for growth here, and it sits in the lower half of its fee-financial peer group on price-to-earnings. The bear case is that this is appropriate, not a bargain. A platform facing fee compression from its fastest-growing protocol and share competition from larger rivals is a high-quality business whose best growth may be behind it, and a high return on equity does not lift a stock whose fee base is no longer expanding.

Valuation

A capital-light fee business is worth the fee earnings it generates, not the book value it carries, so the right lens for MarketAxess is price-to-earnings, and on that lens the price is undemanding. At roughly seventeen times earnings, a 6% earnings yield, the price implies the firm lets its fee earnings decline about 3% a year over the next several years. That is a low bar for a company whose most recent quarter grew revenue 12% and credit volume 17%, and it sits in the lower half of the fee-financial peer group. The market has stopped paying MarketAxess for growth; the question the valuation poses is whether that is correct.

The methods cluster, which is the signal that this is a fairly valued name rather than a clear bargain or an obvious overvaluation. The peer-multiple and growth-based cash-flow methods land close to the price, and the asset-value lenses, which capitalize the very high return on equity of about 26%, also sit nearby. None of the families screams expensive, and the forward-growth read actually lands at or just below the price, which is unusual for a former high-multiple darling. The pattern says the de-rating has already done the work: the stock that once traded at a steep premium now trades at a multiple that prices only modest decline, so the path to a higher price runs through MarketAxess simply re-establishing that its growth is intact, not through any heroic re-rating.

Solvency is a non-issue and a quiet asset. The company holds a net cash position, generates trailing free cash flow of about $316 million on a 52% EBITDA margin, and covers its minimal interest many times over. The share count has been declining, so the abundant cash is being returned rather than diluted away. The decisive variable for the valuation is not the balance sheet, which could hardly be stronger, but the fee mix and the competitive trajectory: whether the growth in lower-fee portfolio trading and the pressure from larger rivals compress the blended economics faster than volume grows. At a price that already assumes a slow fade, MarketAxess does not need to reaccelerate to its old pace. It needs only to show that the fee base is stable, and the high return on equity does the rest.

Catalysts

MarketAxess delivered a Q1 2026 beat. EPS of $2.25 topped the $2.20 estimate, total revenue rose 12% to $233.4 million, and the operating engine showed acceleration where it was most doubted: credit commission revenue grew 9% on a 17% rise in total credit volume, block-trading average daily volume jumped 35% to records, and portfolio-trading average daily volume rose 51% to a record $1.9 billion. Growth in product areas outside U.S. credit ran 20%, and the EBITDA margin held at 52.1%. The standout caution is that the fastest-growing protocol carries lower fees, so the volume and revenue lines can diverge.

The forward setup runs on volume and mix. Management guided to roughly $2.02 of EPS for the second quarter and about $8.23 for the full year, and the metrics to watch are total credit trading volume, the firm's estimated market share against larger competitors, and the blended fee capture as portfolio trading grows. The international and services lines are the diversification catalysts, both growing double digits and reducing reliance on any single product. With a net cash balance sheet and strong free cash flow, the capital-return cadence, principally buybacks against a shrinking share count, is the other lever that compounds per-share value while the market waits to see whether the growth rate re-establishes itself.

Peer Cohorts (Per Segment, With Filing Citations)

MarketAxess (consolidated) (reported)

• TW (Tradeweb Markets Inc.)
• FY2025 10-K: …LSEG, as incremental market data revenue. The Company's client sectors continue to become more interwoven and the Company benefits from these cross-marketplace network effects. For example, many of the Company's asset manager, hedge fund, insurance, central bank/sovereign entity and regional dealer clients actively…
• FY2025 10-K: …154 Note 19 Regulatory Capital Requirements 155 Note 20 Business Segment and Geographic Information 155 Note 2 1 Subsequent Events 157 113 Table of Contents Tradeweb Markets Inc. and Subsidiaries Notes to Consolidated Financial Statements 1. Organization Tradeweb Markets Inc. (the "Corporation") was incorporated as a…
• CBOE (Cboe Global Markets, Inc.)
• FY2025 10-K: …results are prospectively included in the Futures segment beginning in the first quarter of 2025. Digital results from 2024 have been retained in the former Digital segment for comparative purposes. See Note 16 ("Segment Reporting") for additional information. 58 Table of Contents The following is a reconciliation of…
• FY2025 10-K: …by FASB. ( b) Basis of Presentation The accompanying financial statements are presented on a consolidated basis to include the accounts and transactions of Cboe Global Markets, Inc. and its majority owned subsidiaries and all significant intercompany accounts and transactions have been eliminated. The preparation of…
• ICE (Intercontinental Exchange Inc)
• FY2025 10-K: …and acquisitions of companies and intellectual property. We intend to continue to increase the ease of access and connectivity with our existing and prospective customers and expand our customer base by leveraging our existing relationships and our global sales and marketing team to promote participation on our…
• FY2025 10-K: …of compensation and benefits, professional services, technology and communication, rent and occupancy and selling, general and administrative expenses. Our CODM does not review total assets or statements of income below operating income by segments; therefore, such information is not presented below. Our three…
• NDAQ (Nasdaq, Inc.)
• FY2025 10-K: …other exchange operators, operators of non-exchange trading systems and banks and brokerages that operate their own internal trading pools and platforms. In the U.S., our options markets compete with exchanges operated by Cboe Global Markets, Inc., or CBOE , Miami International Holdings, Inc., or MIAX,…
• FY2025 10-K: …for all periods presented, and in our Corporate segment for our segment disclosures. Our transaction-based platforms provide market participants with the ability to access, process, display and integrate orders and quotes. The platforms allow the routing and execution of buy and sell orders as well as the reporting…
• CME (CME Group Inc)
• FY2025 10-K: …covering both major financial and economic benchmarks and sporting events. • Introducing new services and tools to assist our clients in managing their risks. We have a history of providing customer value and responsiveness and believe our products and services position us to help our customers adapt to and comply…
• FY2025 10-K: …fixed income and OTC FX trading through the CME Globex platform. In addition, it operates one of the world's leading central counterparty clearing houses. CME Group offers clearing, settlement and guarantees for all products cleared through the clearing house, which is operated by CME. Chicago Mercantile Exchange…
• MIAX (Miami International Holdings, Inc.)
• FY2025 10-K: …Luxembourg Stock Exchange, the Vienna Stock Exchange, The London Stock Exchange for debt listings. A number of these competitors have greater financial, technical, marketing and other resources than does BSX and TISE. Some of them are larger and better capitalized, have greater name recognition, and have more…
• FY2025 10-K: …operations relating to listed U.S. equities and ETP transaction services that occur on MIAX Pearl. The Equities segment also includes applicable market data revenue generated from the CTA Plan, the UTP Plan, and the CQS Plan, as well as licensing of proprietary equities market data, routing services and access…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

MarketAxess Q1 2026 results, 2026 · MarketAxess FY2025 10-K