- CHART- know how to read charts. I firmly believe I can improve the price of buying or selling from an understanding of chart action.
First bullish divergence seen since October of 2011; +1
- ANALYSTS- read analyst reports but come to your own conclusions.
2 Strong Buy, 5 Buy and 12 Hold (according to CNBC). Analysts remain neutral; 0
- INSIDERS- if the people that know the company the best are not buying it, why should you?
Positive balance of insider buying including action as of April 30th at a price of $25.48; +1
- MANAGEMENT DISCUSSION 10Q AND 10K- this is the only truthful thing you will read about a company. It’s composed by management, the auditors, and the firm’s lawyers. If all three of them can agree on the verbiage, it’s passed a big hurdle. Read it carefully. Pay particular attention to the Risks, Litigation, and Related Transaction sections. These are the things you will wish you had taken the time to read if something goes bad with your investment.
“Uncertainty in the U.S. credit markets that commenced with the upheaval in 2008 continues to impact the economy. Equity market indices have experienced volatility and the market may remain volatile throughout 2012. Economic uncertainty in the European Union and the political upheaval in certain North African countries could spread to other countries and may continue to negatively affect global financial markets. While markets may improve, these factors have adversely affected our revenues and operating income and may negatively impact future growth.”
Revenues declined 17% in Q1 2012 but a startling 25% in their main business, Transaction and clearing fees. Total revenues, less transaction-based expenses, decreased primarily due to lower volumes across our trading venues and the negative impact of foreign currency, partially offset by the growth in our non-transaction-based revenues (including listing and technology services). Compared to the first quarter of 2011, the $60 million decrease in total revenues, less transaction-based expenses, was driven by a $56 million decrease in European derivatives net trading revenue as a result of a 28% decrease in average daily volume and average net revenue capture per contract and a $8 million decrease in U.S. equity options trading net revenue driven by a 6% decrease in average daily volume and a decline in average net capture per U.S. equity option contract.
Cash flows from operating activities
For the three months ended March 31, 2012, net cash provided by operating activities was $200 million, representing primarily net income of $91 million and depreciation and amortization of $66 million, partially offset by a decrease in working capital of $25 million should be sufficient to maintain the $77 million paid in dividends if their is not further market collapse.
After an “off first quarter”, NYX has strong conviction about returning top line growth to double digits moving forward. Derivatives revenue makes up about 25% of revenue with 4% growth in 2011 and they are poised to expand into the credit default swap clearing business as the market continues to expand for them; +1
- RELATIVE PERFORMANCE- If the stock has a superior relative performance to the market in the short term
Consistently underperformed the S&P 500 since the mid 2011; -1
- SECTOR OUTLOOK- buying a good stock in a bad sector can be a humbling experience
With recent volume declines and the persistency of market fear many investors are still keeping their money out of the market; -1
- CASH FLOW- cash flow is more accurate than earnings. Earnings can be more easily manipulated.
Cash flow dropped substantially in Q1 2012 versus 2011. Cash flow was $151 in 2011 and $91 in 2012. Considering
- PEG RATIO- it’s good to find a company growing faster than it’s multiple.
1.01 (according to Yahoo! Finance) indicates earnings growth consistent with P/E ratio; 0
- VALUATION- contrary to popular opinion, it does matter what you pay for a company. Check its discounted cash flow value. Buy it for less than what it’s worth, a 1, less a -1, about the same 0.
NYX has a strong dividend yield (around 4.8%) and a potential for 20% share price growth according to our valuation; +1
- CATALYST- what’s going to change the status quo?
The demand for credit default swaps has continued to rise. If NYX can take advantage of this and position itself as a clearinghouse, then they could see significant growth opportunities. With the increased need for technology solutions to facilitate the movement of swaps as a new retail product; NYX could become a main provider as they currently strive to become an industry leader in tech solutions. Until then NYX continues its status quo; 0