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CMC Markets sails on

The CFD platform has been on a tear, amid unprecedented volatility
June 11, 2020

Derivative trading platform provider CMC Markets’ (CMCX) latest financial year began with its shares at 83p, and ended with a final dividend of 12p. An 18 per cent full-year distribution yield is all the more impressive when you consider that the fruits of extreme recent volatility were confined to the last six weeks of the period.

IC TIP: Hold at 221p

Headline numbers were well-trailed by three forecast-boosting trading updates since markets started to shake in February, the last of which flagged a 14 per cent likely rise in operating costs. In the event, expenses jumped 23 per cent to £151m as bonus awards, one-off regulatory fees, bank transaction charges and bad debts all rose.

This had the effect of pushing pre-tax profits back in line with market expectations, meaning the swooning reception to these numbers was likely down to the dividend and the revelation that client trading activity has not dimmed since the period end. Client income retention – the main driver of last year’s 81 per cent spike in revenue per active client – remains strong, while gross income is double levels seen this time last year.

FactSet-compiled consensus forecasts are for earnings of 15.7p a share for the year to March 2021.

CMC MARKETS (CMCX)  
ORD PRICE:221pMARKET VALUE:£639m
TOUCH:219-224p12-MONTH HIGH:228pLOW: 81p
DIVIDEND YIELD:6.8%PE RATIO:7
NET ASSET VALUE:97.8pNET CASH:£63.4m*
Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201618653.415.18.93
201718848.513.78.93
201820960.117.38.93
20191636.332.02.03
202029598.730.115.03
% change+81+1,459+1,405+640
Ex-div:6 Aug   
Payment:11 Sep   
*Includes lease liabilities of £19.3m