OTC Markets Group

US: OTCM

$421.8m market cap

$36.53 last close

OTC Markets Group operates the OTCQX, OTCQB and Pink financial markets for over 10,000 US and global securities. OTC Link LLC, a member of FINRA, operates OTC Link ATS and OTC Link ECN, both SEC-registered Alternative Trading Systems.

Investment summary

OTC Markets Group’s (OTCM’s) Q318 results showed sound revenue growth, a pick-up in corporate client numbers and a further increase in the number of states granting Blue Sky recognition. Revenue was up by 8% y-o-y. Within this, OTC Link (+16%) was helped by the contribution from the OTC Link ECN trading platform, launched at the end of last year. Although staff costs increased by 8%, reflecting additional headcount and increased compensation, overall expense growth was 3.5%, allowing pre-tax profits to increase by 16%. A lower tax charge in the quarter (18%) resulted in diluted EPS growth of 26% to $0.37. The quarterly dividend was maintained at $0.15 (increased from $0.14 at the Q218 stage) and a special dividend of $0.65 was announced (compared with $0.60 last year). The balance sheet remains strong, with net cash at the period end of $26.1m.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2016A 50.9 18.5 16.9 90.4 40.4 19.0
2017A 54.7 19.7 18.4 105.8 34.5 19.6
2018E 58.6 20.9 20.0 136.1 26.8 23.9
2019E 61.3 21.8 20.9 138.2 26.4 17.4
Last updated on 15/02/2019
Industry outlook

The data-driven transparency and cost-effective proposition of OTCM’s premium markets can be seen to be gaining traction and we increased our estimates following the Q318 results. While fluctuations in market conditions may affect quarterly progress, the long-term scope for increased penetration of international and domestic companies could provide the basis for further estimate increases. Q418/FY18 results due 6 March.

Last updated on 15/02/2019
Share price graph
Balance sheet
Forecast net cash (US$m) 21.1
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 16.6 15.1 44.4
Relative* 9.7 13.2 42.1
52-week high/low US$37.4/US$23.8
*% relative to local index
Key management
Cromwell Coulson CEO
Bea Ordonez CFO