Seems like a high-quality, well-entrenched company with good growth prospects. Which to me begs the question, why did they IPO it for roughly 10x earnings?
Thanks! StoneX (SNEX) and Virtu (VIRT) are the closest public competitors. Price multiples have swung around quite a bit over the years, ranging from MSD to 20-30x. I would say anything under 15x P/E is fair for the current growth.
Seems like a high-quality, well-entrenched company with good growth prospects. Which to me begs the question, why did they IPO it for roughly 10x earnings?
Thanks for the comment, Matt! Likely various reasons IMHO.
1. PE-backed investor overhang
2. Lack of demand due to market volatility (MRX has no commodity price exposure though)
3. Lock-up expired in 10/2024 and secondary (non-dilutive) share offering at $24 reassured investors
4. Unfamiliar in public markets at IPO
5. Analysts underestimated earnings potential. Happened with AMTM recently as well.
This is what I primarily do. Dive into filings and find the under covered names with underlying growth and low valuation.
Interesting idea. What’s a fair PE multiple in this industry? Are there any good publicly traded competitors to compare margins / multiples too?
Thanks! StoneX (SNEX) and Virtu (VIRT) are the closest public competitors. Price multiples have swung around quite a bit over the years, ranging from MSD to 20-30x. I would say anything under 15x P/E is fair for the current growth.