OTC Markets Group (OTCM) AI Stock Analysis

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OTC Markets Group

(OTC:OTCM)

69Neutral

OTC Markets Group's overall score reflects its strong financial performance and reasonable valuation, balanced by technical weaknesses and mixed earnings call outcomes. The company's robust profitability and strategic initiatives offer potential for growth, despite technical bearishness and flat revenue growth in some segments.

OTC Markets Group (OTCM) vs. S&P 500 (SPY)

Market Cap

$562.08M

Dividend Yield1.55%

Average Volume (3M)5.24K

Price to Earnings (P/E)20.6

Beta (1Y)0.12

Revenue Growth1.15%

EPS Growth-1.49%

CountryUS

Employees134

SectorFinancial

Sector Strength83

IndustryFinancial - Data & Stock Exchanges

Share Statistics

EPS (TTM)2.26

Shares Outstanding11,975,122

10 Day Avg. Volume3,529

30 Day Avg. Volume5,236

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)5.39

Price to Cash Flow (P/CF)8.20

P/FCF Ratio8.50

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

OTC Markets Group Business Overview & Revenue Model

Company DescriptionOTC Markets Group Inc. is a financial market infrastructure company that operates one of the largest electronic marketplaces for the trading of over-the-counter (OTC) securities. The company provides platforms for broker-dealers to trade a wide array of equity securities, including stocks of international companies, American depositary receipts (ADRs), and U.S. community banks. OTC Markets Group categorizes its markets into three tiers: OTCQX, OTCQB, and Pink, offering varying levels of disclosure and transparency to meet the needs of issuers and investors.

How the Company Makes MoneyOTC Markets Group makes money primarily through the fees it charges to companies that want to be listed on its marketplaces. These fees include initial application fees, annual fees, and service fees related to market data licensing. The company also earns revenue from the sale of market data and information services to broker-dealers, institutional investors, and other financial market participants. Additionally, OTC Markets Group generates income through its corporate services, which provide issuers with tools and resources to enhance their visibility and investor outreach. Key partnerships with financial institutions and technology providers help to broaden the distribution and accessibility of its market data products, significantly contributing to its earnings.

OTC Markets Group Financial Statement Overview

Summary

OTC Markets Group demonstrates strong financial performance with high profitability, a robust balance sheet, and efficient cash flow management. Despite modest revenue growth and a slight decline from peak revenues, the company maintains a stable financial position with low leverage and high returns on equity.

Income Statement

Positive

OTC Markets Group demonstrates strong profitability with a high gross profit margin of 47.6% and a solid net profit margin of 26.3% for TTM. Revenue growth has been modest, with a slight increase of 2.2% year-over-year, indicating stable income performance. The EBIT margin stands at 31.2%, reflecting efficient operational management. However, the decline from the peak revenue in 2022 suggests a need for renewed growth strategies.

Balance Sheet

Very Positive

The company's balance sheet is robust, reflecting a low debt-to-equity ratio of 0.27, indicating prudent financial leverage. The return on equity is substantial at 57.4%, showcasing strong profitability relative to equity. An equity ratio of 52.1% points to a solid capital structure, though the recent increase in stockholders' equity has been significant. These factors highlight financial stability and resilience.

Cash Flow

Very Positive

OTC Markets Group displays a healthy cash flow position with a high operating cash flow to net income ratio of 1.19, indicating strong cash conversion. The free cash flow growth rate is slightly negative at -2.4%, a result of lower capital expenditures. The free cash flow to net income ratio is robust at 1.13, underscoring efficient cash utilization. These metrics suggest strong cash flow management and potential for future investments.

TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
103.37M	101.13M	105.15M	99.91M	68.42M	60.35M
	Gross Profit
49.21M	49.91M	58.62M	56.59M	36.50M	32.61M
	EBIT
32.25M	32.59M	36.82M	38.02M	21.43M	17.88M
	EBITDA
35.00M	35.06M	38.91M	39.81M	23.20M	19.37M
	Net Income Common Stockholders
27.15M	27.05M	30.81M	30.48M	18.27M	14.94M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
28.81M	37.72M	37.37M	50.39M	33.73M	28.22M
	Total Assets
41.65M	90.53M	89.62M	82.25M	64.81M	60.35M
	Total Debt
0.00	13.95M	15.24M	16.46M	16.29M	17.47M
	Net Debt
-28.81M	-20.15M	-22.13M	-33.94M	-17.44M	-10.75M
	Total Liabilities
25.24M	58.30M	59.81M	57.30M	45.26M	42.68M
	Stockholders Equity
16.41M	32.23M	29.80M	24.95M	19.55M	17.67M
Cash Flow		Free Cash Flow
30.71M	31.47M	32.24M	45.06M	24.98M	16.56M
	Operating Cash Flow
32.18M	33.04M	33.68M	46.46M	26.01M	21.41M
	Investing Cash Flow
-3.78M	-5.19M	-16.39M	-1.40M	-1.03M	-5.52M
	Financing Cash Flow
-30.15M	-31.10M	-30.31M	-28.40M	-19.46M	-16.65M

OTC Markets Group Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price46.94

Price Trends

50DMA

47.89

Negative

100DMA

50.10

Negative

200DMA

48.75

Negative

Market Momentum

MACD

-0.41

Negative

RSI

51.91

Neutral

STOCH

86.91

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OTCM, the sentiment is Neutral. The current price of 46.94 is above the 20-day moving average (MA) of 46.31, below the 50-day MA of 47.89, and below the 200-day MA of 48.75, indicating a neutral trend. The MACD of -0.41 indicates Negative momentum. The RSI at 51.91 is Neutral, neither overbought nor oversold. The STOCH value of 86.91 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for OTCM.

OTC Markets Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CME	81 Outperform	$94.88B	26.47	13.38%	3.99%	11.72%	13.31%
CBOE	79 Outperform	$22.37B	29.48	18.42%	1.15%	8.51%	1.13%
ICE	78 Outperform	$93.78B	34.09	10.32%	1.12%	15.32%	14.02%
NDAQ	74 Outperform	$42.91B	33.91	11.43%	1.28%	25.89%	16.38%
OTCM	69 Neutral	$562.08M	20.56	78.87%	1.55%	1.15%	-1.49%
DNB	63 Neutral	$4.08B	―	-0.85%	2.19%	2.93%	39.49%
Sector *	63 Neutral	$12.32B	9.52	7.97%	79.23%	12.77%	-4.57%

* Financial Sector Average

Performance Comparison

OTCM

OTC Markets Group

46.94

-3.36

-6.68%

CBOE

Cboe Global Markets

213.59

37.34

21.19%

CME

CME Group

266.30

64.69

32.09%

ICE

Intercontinental Exchange

163.23

33.08

25.42%

NDAQ

Nasdaq

75.36

16.06

27.08%

DNB

Dun & Bradstreet Holdings

9.19

0.02

0.22%

OTC Markets Group Earnings Call Summary

Earnings Call Date: Mar 12, 2025 | % Change Since: -2.96% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted a record revenue achievement and promising initiatives like overnight trading, but it also pointed out several challenges such as declining corporate services revenue and increased operating expenses. While there is strong growth in OTC Link and a positive outlook on regulatory engagement, the subscriber decline and flat market data revenue balance the sentiment.

Highlights

Record Revenue Achievement

OTC Markets Group achieved over $111 million in annual revenues for the first time, marking a 1% increase compared to 2023.

Growth in OTC Link Business

OTC Link's revenues increased by 14% year-over-year, driven by a 21% increase in revenues from OTC Link ECN and NQB, and a 16% increase in revenues from ATS messages.

Overnight Trading Initiative

OTC Markets is launching OTC Overnight and Moon ATS for trading in OTC and exchange-listed securities, providing access during Asian market hours and European market open.

Dividend Declaration

The Board of Directors declared a quarterly dividend of $0.18 per share, reflecting the company's commitment to shareholder returns.

Positive Retention Rates

Retention rate for OTCQX subscription period beginning January 1, 2025, achieved a 96% retention rate, up from 93% in the previous year.

Lowlights

Decrease in Corporate Services Revenue

Corporate services revenues decreased by 4% for the year, with a flat revenue from OTCQX and decreases of 5% and 7% in OTCQB and DNS revenues.

Subscriber Decline in Corporate Services

OTCQX and OTCQB saw declines in the number of companies, with OTCQX down 6% and OTCQB down 8% at the end of the quarter.

Flat Market Data Licensing Revenue

Market data licensing business saw only a modest 1% growth year-over-year, with a decline of 10% in non-pro user revenue.

Increased Operating Expenses

Operating expenses increased by 1% for the year, driven by a 7% increase in compensation and benefits and a 16% increase in IT infrastructure costs.

Company Guidance

The guidance provided during the OTC Markets Group Fourth Quarter and Full Year 2024 Earnings Conference Call highlighted several key metrics and strategic priorities. The company reported a slight increase in both gross and net revenues, achieving over $111 million in annual revenues for the first time, with a notable 33% growth in OTC Link's revenues. The market data licensing business remained flat, while corporate services saw a 6% decrease in revenue. Operating expenses grew by approximately 1%, and the company maintained a 1% increase in adjusted EBITDA, amounting to $41.3 million. In 2025, the company plans to focus on two major projects: the launch of OTC Overnight, enabling trading from 8 pm to 4 am Eastern Time, and the development of the OTCID basic reporting market, set to launch on July 1, 2025. Additionally, the company declared a quarterly dividend of $0.18 per share, demonstrating its commitment to shareholder returns.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.