Market Capitalization $11.6 Billion

Transcription

1 BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate BUY BUY RATING SINCE 01/17/2013 TARGET PRICE $ BUSINESS DESCRIPTION Inc., together with its subsidiaries, provides products and services to support the needs of institutional investors throughout their investment processes worldwide. The company operates through four segments: Index, Analytics, ESG, and Real Estate. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues Net Income EPS RETURN ON EQUITY (%) Ind Avg S&P 500 Q Q Q Sector: Financial Services Sub-Industry: Financial Exchanges & Data Source: S&P Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years Rating History BUY Volume in Millions COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History TARGET PRICE $ P/E COMPARISON RECOMMENDATION We rate () a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any nesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value EPS ANALYSIS¹ ($) Ind Avg S&P 500 HIGHLIGHTS has improved earnings per share by 36.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, increased its bottom line by earning $2.70 versus $2.10 in the prior year. This year, the market expects an improvement in earnings ($3.83 versus $2.70). The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income increased by 30.4% when compared to the same quarter one year prior, rising from $65.28 million to $85.15 million. Q Q Q Q Q Q Q NA = not available NM = not meaningful Q Q Q Q Compustat fiscal year convention is used for all fundamental data items. Despite its growing revenue, the company underperformed as compared with the industry average of 17.5%. Since the same quarter one year prior, revenues rose by 11.7%. Growth in the company's revenue appears to have helped boost the earnings per share. The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Capital Markets industry and the overall market, 's return on equity significantly exceeds that of both the industry average and the S&P 500. The gross profit margin for is currently very high, coming in at 78.74%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 26.43% is above that of the industry average. PAGE 1

2 PEER GROUP ANALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) DFIN 0% 350% UNFAVORABLE 10% VALU EBITDA Margin (TTM) CBOE FDS TRI MORN NDAQ FAVORABLE ICE MKTX MCO 55% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $171.7 Million and $41.8 Billion. Companies with NA or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) 0% 350% UNFAVORABLE 1% MCO CBOE Earnings Yield (TTM) NDAQ MKTX FAVORABLE DFIN FDS TRI VALU ICE MORN Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between 0.5% and 346.1%. Companies with NA or NM values do not appear. 5% INDUSTRY ANALYSIS The US capital markets industry includes securities brokerage, investment banking, advisory services, asset management, and custody firms. The industry is subject to federal, state, and international regulations, which are intended to protect investors. The industry is sensitive to interest rate changes, stock market performance, and economic fluctuations. Major asset management and custody banks include Bank of New York Mellon (BK), State Street (STT), BlackRock (BLK), and Franklin Resources (BEN). Goldman Sachs (GS), Morgan Stanley (MS), and Charles Schwab (SCHW) are major players in investment banking and brokerage. The investment management business is mature, highly competitive, and marked by intense competition due to increasing demand from customers for investment advice and custom investment vehicles. Registered investment advisors managed assets worth in excess of $13 trillion. Key demand drivers are primary debt and equity offerings and the volume of mergers and acquisitions activity across sectors. Consolidation is on the rise as companies seek protection from competition. The brokerage sub-industry provides investment advice and brokerage of stocks, fixed-maturity securities, derivatives, and mutual funds to institutional investors and individuals. The sub-industry is concentrated and characterized by consolidation activity. Hefty returns over the past decade have encouraged investors to actively trade, which in turn, drives demand for brokerage activities and consulting services. Nearly 10,000 domestic firms, with annual revenue of $15 billion, provide financial planning and advisory services. This sub-industry is driven by consumer income and population growth. Approximately 60% of total revenue is generated from individual investors. Investor confidence has been crushed by recent disruptions in the capital and credit markets, stemming from a deteriorating housing market and the subprime meltdown. The capital markets industry has seen dramatic changes. Former industry leaders Lehman Brothers and Merrill Lynch have either filed for bankruptcy or sold out. Surviving investment banks, like Goldman Sachs and Morgan Stanley, have become bank holding companies to qualify for U.S. government assistance under the Troubled Asset Relief Program, or TARP. PEER GROUP: Capital Markets Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) , , FDS FACTSET RESEARCH SYSTEMS I , , MKTX MARKETAXESS HOLDINGS INC , DFIN DONNELLEY FINANCIAL SOLTNS , ICE INTERCONTINENTAL EXCHANGE , , , MORN MORNINGSTAR INC , TRI THOMSON-REUTERS CORP , , , MCO MOODY'S CORP , , VALU VALUE LINE INC CBOE CBOE GLOBAL MARKETS INC , , NDAQ NASDAQ INC , , The peer group comparison is based on Major Financial Exchanges & Data companies of comparable size. PAGE 2

3 Annual Dividend Rate COMPANY DESCRIPTION Inc., together with its subsidiaries, provides products and services to support the needs of institutional investors throughout their investment processes worldwide. The company operates through four segments: Index, Analytics, ESG, and Real Estate. The Index segment primarily provides equity indexes for use in various areas of the investment process, including index-linked product creation and performance benchmarking, as well as portfolio construction and rebalancing, and asset allocation. The Analytics segment offers products and services that help institutional investors understand and control for market, credit, liquidity and counterparty risk across various major asset classes, spanning short, and medium and long-term time horizons; and products and services that assist institutional investors with portfolio construction, risk management, performance attribution and regulatory reporting, as well as uses analytical content to create products and services, which offer institutional investors an integrated view of risk and return. The ESG segment provides products and services that help institutional investors understand how environmental, social, and governance (ESG) factors impact the long-term risk of their investments; data and ratings products for use in the construction of equity and fixed income indexes to help institutional investors benchmark ESG investment performance and issue index-based investment products, as well as manage, measure, and report on ESG mandates. The Real Estate segment offers real estate performance analysis for funds, investors, managers, and lenders. This segment provides products and offer services that include research, reporting, and benchmarking; and business intelligence to real estate owners, managers, developers, and brokers. Inc. was founded in 1998 and is headquartered in New York, New York. 7 World Trade Center, 49th Floor, 250 Greenwich St New York, NY USA Phone: Fax: Employees: 3000 STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 5.0 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, has a growth score better than 90% of the stocks we rate. Total Return 5.0 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 90% of the companies we cover. Efficiency 4.5 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 80% of the companies we review. Price volatility 5.0 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 90% of the stocks we monitor. Solvency 2.0 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 30% of the companies we analyze. Income 3.5 out of 5 stars Measures dividend yield and payouts to shareholders. The company's dividend is higher than 60% of the companies we track. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. PAGE 3

4 Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial FINANCIAL ANALYSIS 's gross profit margin for the third quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. The company has grown its sales and net income during the past quarter when compared with the same quarter a year ago, and although its growth in net income has outpaced the industry average, its revenue growth has not. has liquidity. Currently, the Quick Ratio is 1.97 which shows the ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow Q4 FY E 2017(E) 4.55 E 2018(E) At the same time, stockholders' equity ("net worth") has significantly decreased by 34.66% from the same quarter last year. The key liquidity measurements indicate that the company is unlikely to face financial difficulties in the near future. INCOME STATEMENT Net Sales ($mil) EBITDA ($mil) EBIT ($mil) Net Income ($mil) STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit BALANCE SHEET Cash & Equiv. ($mil) Total Assets ($mil) 3, , Total Debt ($mil) 2, , Equity ($mil) PROFITABILITY Gross Profit Margin 78.74% 78.16% EBITDA Margin 52.34% 49.69% Operating Margin 46.15% 42.73% Sales Turnover Return on Assets 9.75% 7.62% Return on Equity 85.37% 45.80% DEBT Current Ratio Debt/Capital 0.79 Interest Expense Interest Coverage SHARE DATA Shares outstanding (mil) Div / share EPS Book value / share Institutional Own % NA NA Avg Daily Volume 416, ,953 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. PAGE 4

5 RATINGS HISTORY Our rating for has not changed since 1/17/2013. As of 11/30/2017, the stock was trading at a price of which is 1.0% below its 52-week high of $ and 68.2% above its 52-week low of $ Year Chart BUY: $ $140 $120 $100 $80 MOST RECENT RATINGS CHANGES Date Price Action From To 11/30/15 $70.12 No Change Buy Buy Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 11/30/2017) 44.19% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months. 3% Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss % Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY Research Contact: Sales Contact: VALUATION BUY. 's P/E ratio indicates a significant premium compared to an average of for the Capital Markets industry and a significant premium compared to the S&P 500 average of For additional comparison, its price-to-book ratio of indicates a significant premium versus the S&P 500 average of 3.24 and a significant premium versus the industry average of The price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, proves to trade at a premium to investment alternatives within the industry. Price/Earnings Peers Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations. Price/Projected Earnings Peers Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations. Price/Book Peers 4.36 Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. Price/Sales 9.41 Peers 4.53 Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. industry. DISCLAIMER: Price/CashFlow Peers Premium. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. Price to Earnings/Growth 0.92 Peers 1.30 Discount. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. trades at a significant discount to its Earnings Growth lower higher Peers Average. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. is expected to keep pace with its peers on the basis of earnings growth. Sales Growth lower higher 8.97 Peers Lower. A sales growth rate that trails the industry implies that a company is losing market share. significantly trails its peers on the basis of sales growth The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at PAGE 5