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TMX Group Posts Better-Than-Expected 1Q Results, Boosts Dividend 10%

TMX Group LTD (X) reported higher revenues and profits in the first quarter of 2021. The Canadian financial services company operates the Toronto Stock Exchange (TSX).

Indeed, TMX’s revenue for 1Q 2021 came in at C$252 million, an increase of 14% from the revenue of C$220.3 million reported in 1Q 2020. Analysts expected C$243.4 million in revenue. Revenue growth was driven by increased market activity in equities and fixed income trading and strength in its clearing and capital formation businesses.

Meanwhile, the company reported a profit of C$96.4 million (C$1.70 per diluted share) in the first quarter, up 38% from C$70.1 million (C$1.24 per diluted share) in the same quarter a year earlier.

On an adjusted basis, TMX earned C$106.5 million (C$1.88 per diluted share), compared to C$87 million (C$1.53 per diluted share) in the first quarter of 2020. Analysts expected TMX to record adjusted earnings of C$1.78 per share, according to financial data firm Refinitiv.

TMX Group’s CEO John McKenzie said, “TMX’s strong performance in the first quarter reflects significant contributions from across our business and robust capital markets activity, including a 122% increase in financing dollars raised by Toronto Stock Exchange and TSX Venture Exchange issuers, and record overall equities trading volumes, up 50% from the first quarter of last year. In collaboration with our clients and stakeholders, we continued to build on TMX’s history of innovation during the quarter, with the launch of the world’s first publicly-listed Bitcoin and Ether ETFs.”

TMX also said it would increase its quarterly dividend by 10% to C$0.77 per common share. The dividend hike is the fourth in three years. (See TMX Group Ltd stock analysis on TipRanks)

On May 3, TD Securities analyst Graham Ryding maintained a Buy rating on the stock while raising its price target to C$155.00 from C$145.00, for a 15% upside potential.

Overall, TMX stock scores a Moderate Buy consensus rating based on 3 Buys and 2 Holds. The average analyst price target of C$156.83 implies a 16.5% upside potential to current levels. Shares have risen by approximately 6% year-to-date.

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