BGC Partners, Inc. (BGCP) in New York City operates as a financial brokerage and technology company. It offers various brokerage products, including government bonds, corporate bonds, and other debt instruments, as well as related interest rate derivatives and credit derivatives, equity derivatives and cash equities, energy and commodities, shipping, insurance, and futures and options. The company also provides trade execution, brokerage, clearing, trade compression, post-trade, information, consulting, and other back-office services to financial and non-financial institutions.
BGCP’s revenue and earnings in its last reported quarter came in below analyst estimates. Furthermore, the company failed to surpass earnings estimates in the trailing four quarters. However, as BGCP scales up its technology-driven marketplace named Fenics Markets Xchange (FMX) and expands Lucera across cryptocurrency platforms, its revenues and earnings are expected to improve in the coming months.
The stock has declined 32% in price year-to-date and 48.3% over the past year to close the last trading session at $3.16. However, Wall Street analysts expect the stock to hit $8.50 in the near term, indicating a potential 169% upside.
Here is what could influence BGCP’s performance in the upcoming months:
Mixed Financials
BGCP’s revenues declined 10.8% year-over-year to $506.46 million for the first quarter ended March 31, 2022. The company’s adjusted EBITDA declined 4% year-over-year to $141.30 million. Also, its post-tax adjusted earnings increased 2% year-over-year to $103.16 million. In addition, its post-tax adjusted EPS came in at $0.21, representing an 16.6% increase year-over-year.
Mixed Analyst Estimates
Analysts expect BGCP’s revenue for its fiscal year 2022 to decline 8.8% year-over-year to $1.84 billion. However, its EPS and revenue for its fiscal 2023 are expected to increase 20.6% and 6.8%, respectively, year-over-year to $0.82 and $1.96 billion.
Mixed Valuation
In terms of forward P/S, BGCP’s 0.64x is 78.4% lower than the 2.95x industry average. Its 4.80x forward non-GAAP P/E is 53.9% lower than the 10.41x industry average. Also, the stock’s 3.51x forward P/CF is 67% lower than 10.64x industry average. And its 1.52x forward P/B is 34% higher than the 1.14x industry average.
High Profitability
In terms of trailing-12-month gross profit margin, BGCP’s 89.19% is 38.3% higher than the 64.46% industry average. And its 0.36% trailing-12-month asset turnover ratio is 68.5% higher than the 0.21% industry average. Furthermore, the stock’s trailing-12-month ROCE and ROA came in at 14.61% and 2.17%, respectively, compared to the 12.66% and 1.26% industry averages.
POWR Ratings Show Promise
BGCP has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. BGCP has a C grade for Value, which is in sync with its mixed valuation.
BGCP is ranked #3 out of 24 stocks in the Investment Brokerage industry. Click here to access BGCP’s Growth, Momentum, Stability, Sentiment, and Quality ratings.
Bottom Line
Despite missing its earnings and revenue estimates, BGCP’s revenues and earnings are expected to grow next year as it scales up its trading and execution platform, FMX. Furthermore, given its higher-than-industry profitability, we think it could be wise to buy the stock now.
How Does BGC Partners, Inc. (BGCP) Stack Up Against its Peers?
BGCP has an overall POWR Rating of B, which equates to a Buy rating. Some other B-rated stocks in the Investment Brokerage industry are Raymond James Financial, Inc. (RJF), PJT Partners Inc. (PJT), and Evercore Inc. (EVR).
BGCP shares were trading at $3.16 per share on Tuesday morning, down $0.00 (0.00%). Year-to-date, BGCP has declined -31.68%, versus a -13.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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