Buy Tradeweb Markets (TW) Stock During Coronavirus Market Volatility?
The coronavirus helped all three major U.S. indexes fall over 30% from their highs at lightspeed. The market might not be at the bottom yet, but the Dow technically jumped into a new bull market Thursday, only three days after reaching its bear-market low.
Stocks then fell again Friday to once again highlight the coronavirus-based volatility that looks poised to remain amid the ongoing economic uncertainty. That said, investors might want to consider taking a look at Tradeweb Markets TW stock amid the heavy volatility.
The Quick Pitch
Tradeweb is a global operator of electronic marketplaces for rates, credit, equities, and money markets. The company was founded in 1996 and provides access to markets, data and analytics, electronic trading, and more for over 40 products to clients in the institutional, wholesale, and retail markets.
Tradeweb, which went public in April 2019, has also benefitted from the increased trading amid the coronavirus market chaos. In fact, the firm reported record trading volume in February.
TW’s average daily volume came in at $885.6 billion in aggregate last month, up 47% from the year-ago period. Plus, Tradeweb’s average volume came in at $1.1 trillion during the final week of the month, which captured the start of the heavy coronavirus selling.
TW noted that it posted record average daily volume across several products, including U.S. government bonds, mortgages, U.S. and European credit, repurchase agreements, and more. “In volatile high volume periods it is vital that investors and traders can depend on robust and resilient marketplaces to exchange risk efficiently, across a range of asset classes,” CEO Lee Olesky said in prepared remarks.
Other Fundamentals
The New York-based firm’s full-year fiscal 2019 revenue jumped 13.3% to $775.6 million. Meanwhile, its 2019 average daily volume surged over 32% to $725.4 billion. Both of these marked new records and highlight how the electronic trading of bonds, credit derivatives, and much more have become increasingly popular in recent years.
The nearby chart helps us see that TW stock is up roughly 19% since it went public in early April 2019. This climb outpaces the S&P 500, fellow 2019 IPO names such as Uber UBER and Lyft LYFT, as well as its peer group’s 5% average decline.
Tradeweb shares closed regular trading Friday 20% below their 52-week highs at $42.10 a share, which could give it room to run. The company also declared a dividend of $0.08 per share last quarter. TW’s yield currently rests at 0.75%, which puts it slightly above the 10-year U.S. Treasury’s 0.67%.
Outlook
Looking ahead, our Zacks estimates call for Tradeweb’s first quarter revenue to jump 13.6%, with its full-year fiscal 2020 sales set to pop 11% to reach $859.93 million. At the bottom end of the income statement, TW’s adjusted Q1 earnings are projected to surge over 30% to $0.30 a share.
Meanwhile, its adjusted fiscal 2020 EPS figure is expected to soar 57% to come in at $1.21 per share. On top of that, Tradeweb’s earnings revision picture has climbed completely upward recently, even as many other firms see their bottom-line estimates take a hit as the coronavirus slows the economy to as close to a halt as many thought possible.
Bottom Line
Tradeweb’s positive earnings revisions help it earn a Zacks Rank #1 (Strong Buy) right now. The stock also boasts a “B” grade for Growth and an “A” for Momentum in our Style Scores system. Therefore, some investors might want to take a chance on TW stock because it stands to benefit during the increased coronavirus volatility and beyond.
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