TMX Q4 Results Beat Estimates, Dividend Raised

TMX Group (TSE: X) posted double-digit profit and revenue growth in the fourth quarter of 2021. The Canadian financial services company operates the Toronto Stock Exchange (TSX). 

Revenue & Earnings

Revenue for Q4 2021 came in at C$252.4 million, an increase of 15% from the revenue of C$219.5 million reported in Q4 2020.

The company reported a profit of C$87.9 million (C$1.56 per diluted share) in the fourth quarter, up 22% from C$71.8 million (C$1.27 per share) in the same quarter a year earlier.  

On an adjusted basis, TMX earned C$99 million (C$1.77 per diluted share), compared with C$80 million (C$1.43 per diluted share) in the fourth quarter of 2021.

Analysts expected TMX to report C$1.72 per share in adjusted earnings on C$251.4 million in revenue, according to financial data firm Refinitiv. 

Management Commentary

TMX Group CEO John McKenzie said, “TMX’s excellent 2021 results, highlighted by double digit revenue and earnings per share growth, reflect an extraordinary year for clients raising capital on our markets and strength across our business model. Year-over-year growth was driven by increased revenue from Capital Formation, Derivatives Trading and Clearing, and Trayport.”

The quarterly dividend has been increased by C$0.06 per common share, up 8% to C$0.83 per common share

Wall Street’s Take

On February 4, Scotiabank analyst Phil Hardie kept a Hold rating on X and lowered its price target to C$150 (from C$154). This implies 22% upside potential.

Overall, TMX stock scores a Moderate Buy consensus rating based on two Buys and four Holds. The average TMX Group price target of C$152.99 implies 23.1% upside potential to current levels.  

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