Friday, May 13, 2011

TMX Group Posts Great Results, but Merger with London Exchange Still Ahead.

The Intelligent Investor Top 10 Pick, TMX Group (TSE: X), the operator of the Toronto, Montreal, and Boston Exchanges, today announced positive and well-received financial results. For the first quarter of 2011, revenue for the exchange group was $175 million, up 17 % over last year. Net income was $64 million, up 13 percent, and earnings per share was $0.84, up 9 percent. 

Many investors have been worried that TMX Group's business is slowly being eaten away by Canada's major banks, which began their own competing stock trading platform recently. These fears, though somewhat true, have clearly not materialized as seriously as many thought. TMX is posting strong trading volumes and has developed a number of key growth areas, such as options, futures, and natural resource exchanges. To be sure, in the company's quarterly report, it states that its "energy business continued to flourish," and that volumes at its Boston Options Exchange soared 79 percent... very good news!

The huge question to be answered regarding the TMX Group, of course, is its merger with the London Stock Exchange. Would this merger be a good deal for shareholders? It would allow the companies to experience greater economies of scale and realize substantial cost savings, while at the same time allow it to expand internationally in Europe and developing countries that will be in need of financing for natural resource development, a speciality of both London and Toronto.

For the Intelligent Investor, TMX Group's recent results should be seen as a sign of the company's continued viability, profitability, and success in both Canada, and hopefully international markets as well. Not to mention, with its healthy dividend of almost 4 percent, owning this company pays. 

Happy Investing, and for more information on this topic:

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