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Q3 Earnings Preview for Tradeweb Markets (NasdaqGS:TW)

in EARNINGS/INVESTING IDEAS by

Tradeweb Markets Inc. (NasdaqGS:TW) is scheduled to report Q3 earnings results on October 28, 2020.

The company is expected to report earnings of $0.29/share on revenue of $210.8 million. The consensus earnings per share (EPS) of $0.29/share is based on a poll of 16 analysts and represents a growth in eps of 7.7% over the same quarter last year, when the company reported earnings of $0.27/share.

The revenue forecast of $210.8 million based on a poll of 12 analysts implies a year-over-year (YoY) growth in revenue of 4.9%. Last year the company reported $201 million in revenue for the quarter.

Expected to report EPS growth of 7.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $210.78 $200.98 4.9%
EPS $0.29 $0.27 7.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 6 tracked quarters and met expectations 2 quarters.

What are your expectations from Tradeweb Markets Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.30 $0.30 0% Met
Q1, 2020 $0.35 $0.37 4.9% Beat
Q4, 2019 $0.26 $0.26 0% Met
Q3, 2019 $0.26 $0.27 4.8% Beat
Q2, 2019 $0.23 $0.25 6.7% Beat
Q1, 2019 $0.22 $0.23 4.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $54.61 $54.07 −1.0% Decline
April 20, 2020 $51.63 $51.44 −0.4% Decline
February 12, 2020 $46.18 $47.32 2.5% Increase
October 15, 2019 $39.91 $42.27 5.9% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.09, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.09 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Tradeweb Markets Inc. is currently trading at $59.24/share, up 2.1% for the day. The company is trading at approximately 85.8% of its 52-week high of $69.06/share. The company’s stock price is up 9.6% since the last earnings report and up 2.1% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 59.94 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:TW Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 76.49 and a forward P/E multiple of 37.27.

Tradeweb Markets Inc.’s current share price also implies a price-to-book (P/B) multiple of 3.35. The following table summarizes some other key fundamental ratios:

Data as of October 21, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $59.24
P/E Ratio 76.5x
P/E Ratio (Fwd) 37.3x
PEG Ratio 2.0
Total Debt / Total Capital 0.3%
Levered Free Cash Flow $382.2 million
Price To Sales 15.9x

Finbox

Tradeweb Markets Inc. is a large-cap stock with a market capitalization of $11.119 billion. The company operates in the Financials sector and the Capital Markets industry.

Tradeweb Markets Inc. builds and operates electronic marketplaces in the United States, Europe, Asia, and internationally. The company’s marketplaces facilitate trading in a range of asset classes, including rates, credit, money markets, and equities. It offers pre-trade data and analytics, trade execution, and trade processing, as well as post-trade data, analytics, and reporting services. The company provides flexible order and trading systems to institutional investors in 40 markets across 25 currencies. It also offers a range of electronic, voice, and hybrid platforms to approximately 300 dealers and financial institutions on electronic or hybrid markets with Dealerweb platform; and trading solutions for financial advisory companies and traders with Tradeweb Direct platform. The company serves a network of approximately 2,500 clients in the institutional, wholesale, and retail client sectors. Its customers include asset managers, hedge funds, insurance companies, central banks, banks and dealers, proprietary trading firms, retail brokerage and financial advisory firms, and regional dealers. The company was founded in 1996 and is headquartered in New York, New York. Tradeweb Markets Inc. is a subsidiary of BCP York Holdings.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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