OTC Markets Group (OTCM) AI Stock Analysis

• Market Cap: $644.38M
• Dividend Yield: 4.83%
• Average Volume (3M): 4.16K
• Price to Earnings (P/E): 22.3
• Beta (1Y): 0.10
• Revenue Growth: 7.58%
• EPS Growth: 7.48%
• Country: US
• Employees: 134
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Data & Stock Exchanges
• EPS (TTM): 1.06
• Shares Outstanding: 11,975,122
• 10 Day Avg. Volume: 6,241
• 30 Day Avg. Volume: 4,164
• PEG Ratio: -17.52
• Price to Book (P/B): 17.36
• Price to Sales (P/S): 6.12
• P/FCF Ratio: 19.64
• Enterprise Value/Market Cap: 0.95
• Enterprise Value/Revenue: 5.17
• Enterprise Value/Gross Profit: 9.77
• Enterprise Value/Ebitda: 16.03
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 81 Outperform
• Price Target: $62.00 ▲(20.11% Upside)

OTCM scores well primarily on strong financial performance—especially cash generation and solid margins—backed by improving leverage. The latest earnings call adds support with sustained double-digit revenue growth, expanding operating margin, and successful OTCID traction, though rising expenses and some revenue mix challenges are key watch-outs. Technicals are supportive but slightly capped by overbought signals, while valuation is balanced by a solid dividend yield against a mid-range P/E.

Positive Factors

Revenue Growth

Consistent double-digit revenue growth over three quarters indicates strong market demand and effective business strategies, supporting long-term expansion.

Successful Product Launch

The successful launch of OTCID demonstrates the company's ability to innovate and capture new market segments, enhancing its competitive position.

Operating Margin Improvement

Improved operating margins reflect efficient cost management and pricing power, contributing to sustainable profitability and financial health.

Negative Factors

Increased Transaction-Based Expenses

Rising transaction-based expenses could pressure profit margins, potentially impacting cash flow and limiting reinvestment in growth opportunities.

Decline in Nonprofessional User Revenues

A decline in nonprofessional user revenues suggests challenges in maintaining user engagement, which could affect future revenue streams.

Challenges with Pink Limited Companies

Challenges in upgrading Pink companies to OTCID may limit growth in this segment, affecting the company's ability to expand its service offerings.

OTC Markets Group Business Overview & Revenue Model

Company Description

OTC Markets Group (OTCM) operates a financial market platform that facilitates the trading of over-the-counter (OTC) securities. The company provides a venue for investors to trade a wide range of securities, including stocks, bonds, and other financial instruments. OTCM is primarily focused on the U.S. market and serves various sectors, including small-cap and micro-cap companies, as well as foreign companies seeking access to U.S. investors. Its core services include market data, trading services, and compliance solutions for issuers, enhancing transparency and efficiency in the OTC marketplace.

How the Company Makes Money

OTC Markets Group generates revenue through several key streams. Primarily, it earns money from transaction fees charged to brokers and market participants for executing trades on its platform. Additionally, the company provides subscription-based services that offer market data, analytics, and compliance tools to issuers, investors, and other market participants. These subscriptions contribute a significant portion of its revenue. OTCM also charges fees for the listing and ongoing maintenance of securities on its platforms, including the OTCQX, OTCQB, and Pink markets. Partnerships with financial institutions and data providers further bolster its earnings by expanding its service offerings and enhancing market accessibility.

OTC Markets Group Financial Statement Overview

Summary

Strong, high-quality cash generation (TTM operating cash flow ~$45.3M; free cash flow to net income ~1.0; TTM free cash flow growth ~20%) supports earnings durability. Profitability remains healthy (TTM net margin ~24.7%, operating margin ~30.0%), and leverage has improved materially (debt-to-equity down to ~0.21 TTM). Offsetting factors are choppy revenue history and some margin normalization versus prior peaks.

Income Statement

OTC Markets Group shows consistently strong profitability with healthy margins in both annual periods and TTM (Trailing-Twelve-Months) (TTM net margin ~24.7% and operating margin ~30.0%). Revenue has been choppy—declines in 2023 and 2024 followed by a rebound in TTM growth (~3.7%)—and margins have eased versus the 2021–2022 peak levels, but overall earnings power remains solid and resilient.

Balance Sheet

Leverage is modest and improving, with debt-to-equity declining from ~0.83 (2020) to ~0.21 in TTM (Trailing-Twelve-Months), indicating a stronger capital position over time. Equity has also expanded materially versus prior years, supporting balance-sheet stability. The main watch-out is that returns on equity are extremely high across periods (including TTM), which can reflect strong profitability but may also be influenced by a relatively small equity base versus earnings, making the ratio more sensitive to changes in profitability.

Cash Flow

Cash generation is a clear strength: TTM (Trailing-Twelve-Months) operating cash flow is strong (~$45.3M) with free cash flow nearly matching net income (free cash flow to net income ~1.0), signaling high earnings quality. Free cash flow growth is also robust in TTM (~20%), a notable improvement versus the relatively flat-to-down trend in 2022–2024. A minor weakness is that cash flow coverage of earnings is not consistently above 1.0 in the annual periods (it is above 1.0 in TTM), implying some period-to-period volatility in cash conversion.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	118.07M	101.23M	109.89M	105.15M	99.91M	68.42M
Gross Profit	62.48M	57.11M	58.67M	58.62M	56.59M	36.50M
EBITDA	38.08M	34.89M	34.99M	38.91M	39.81M	23.20M
Net Income	29.11M	27.36M	27.66M	30.81M	30.48M	18.27M
Balance Sheet
Total Assets	101.17M	90.74M	90.53M	89.62M	82.25M	64.81M
Cash, Cash Equivalents and Short-Term Investments	52.67M	39.03M	37.72M	37.37M	50.39M	33.73M
Total Debt	11.27M	12.47M	13.95M	15.24M	16.46M	16.29M
Total Liabilities	48.41M	55.02M	58.30M	59.81M	57.30M	45.26M
Stockholders Equity	52.76M	35.72M	32.23M	29.80M	24.95M	19.55M
Cash Flow
Free Cash Flow	45.06M	31.57M	31.47M	32.24M	45.06M	24.98M
Operating Cash Flow	45.27M	32.87M	33.04M	33.68M	46.46M	26.01M
Investing Cash Flow	-568.00K	-2.19M	-5.19M	-16.39M	-1.40M	-1.03M
Financing Cash Flow	-30.30M	-30.24M	-31.10M	-30.31M	-28.40M	-19.46M

OTC Markets Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 51.62
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OTCM, the sentiment is Positive. The current price of 51.62 is below the 20-day moving average (MA) of 53.97, below the 50-day MA of 52.48, and above the 200-day MA of 50.83, indicating a neutral trend. The MACD of 0.72 indicates Positive momentum. The RSI at 50.82 is Neutral, neither overbought nor oversold. The STOCH value of 34.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OTCM.

OTC Markets Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
OTCM	81 Outperform	$644.38M	22.33	57.35%	4.83%	7.58%	7.48%
ICE	80 Outperform	$99.09B	31.64	11.32%	1.19%	8.96%	30.16%
CBOE	75 Outperform	$27.74B	28.46	21.51%	1.06%	16.74%	26.74%
CME	74 Outperform	$104.23B	28.02	13.35%	3.92%	5.84%	8.51%
NDAQ	74 Outperform	$55.32B	31.36	15.28%	1.07%	16.41%	68.03%
MORN	71 Outperform	$8.31B	22.98	24.42%	0.84%	7.76%	15.92%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%