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TMX Group
(TSX:X)
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Rating:74Outperform
Price Target:
C$57.00
▲(14.16% Upside)
Action:Reiterated
Date:08/03/26
The score is primarily driven by strong financial performance—especially robust and improving free cash flow—supported by a positive earnings call highlighting broad operational momentum and strategic expansion. Offsetting factors are a less compelling valuation (P/E 23.612), only moderately supportive technicals based on moving averages, and execution/leverage risk tied to the announced M&A agenda.
Positive Factors
Free cash flow strength
Sustained, high FCF and 82% FCF-to-net-income conversion provide durable internal funding for dividends, buybacks and M&A without immediate reliance on external financing. Strong cash generation enhances resilience across market cycles and supports strategic optionality over 2–6 months.
Negative Factors
M&A-driven leverage risk
Financing large MEMX/BOX combination with debt could materially increase leverage and interest burden near term, constraining financial flexibility. Successful deleveraging depends on timely synergies, regulatory approvals and cash generation, elevating execution and timing risk over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Free cash flow strength
Sustained, high FCF and 82% FCF-to-net-income conversion provide durable internal funding for dividends, buybacks and M&A without immediate reliance on external financing. Strong cash generation enhances resilience across market cycles and supports strategic optionality over 2–6 months.
Read all positive factors
TMX Group (X) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$14.12B
Dividend Yield1.8%
Average Volume (3M)708.39K
Price to Earnings (P/E)23.6
Beta (1Y)0.35
Revenue Growth0.75%
EPS Growth43.04%
CountryCA
Employees2,190
SectorFinancial
Sector Strength70
IndustryFinancial - Data & Stock Exchanges
Share Statistics
EPS (TTM)2.17
Shares Outstanding275,568,600
10 Day Avg. Volume648,819
30 Day Avg. Volume708,392
Financial Highlights & Ratios
PEG Ratio-2.44
Price to Book (P/B)3.05
Price to Sales (P/S)4.97
P/FCF Ratio25.63
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$64.57Price Target Upside29.32% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
EPS Forecast (FY)2.44
Revenue Forecast (FY)C$1.93B
TMX Group Business Overview & Revenue Model
Company Description
TMX Group Limited is a major global player operating a network of exchanges, markets, and clearinghouses primarily dedicated to capital markets, both within Canada and internationally. The company organizes its business into four distinct segments...
How the Company Makes Money
TMX Group primarily earns revenue by charging fees for operating financial marketplaces and providing post-trade and information services. Key revenue streams generally include: (1) Listings and issuer services: fees paid by companies and other is...
TMX Group Earnings Call Summary
Earnings Call Date:Jul 30, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 02, 2026
Earnings Call Sentiment Positive
The call was predominantly positive: TMX reported broad-based double-digit revenue growth across segments, strong organic momentum in Global Insights (notably VettaFi), robust trading volumes and record derivative open interest, meaningful capital formation and ETF inflows, and a disciplined balance sheet with excess cash and an increased dividend. Management also outlined an ambitious M&A agenda (MEMX Group, RAFI, Cboe Australia/Canada) to accelerate global expansion. Key risks noted include higher operating expenses tied to acquisitions and growth, potential near-term leverage increase from the MEMX investment (conservative pro‑forma up to 3.4x), some venue- and product-specific volume and market share softness (Alpha, BOX, fixed income), and a one-time accounting boost to reported EPS. On balance, the operational and strategic positives materially outweigh the near-term financial and integration risks.Positive Updates
Robust Top-Line Growth
Q2 total revenue of $487.5 million, up 16% year-over-year; first half revenue grew 16% year-over-year. Organic revenue (ex‑recent Global Insights acquisitions) rose 14% for the first 6 months versus 2025.
Negative Updates
Expense Growth and Acquisition-Related Costs
Operating expenses increased 13% in Q2 (approximately 10% on a comparable basis excluding certain items). Incremental costs included $15.6M related to acquisitions, $5.7M of acquisition/integration items and $2.2M higher amortization of acquired intangibles, plus merit increases and higher headcount contributing to cost pressure.
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Q2-2026 Updates
Positive
Negative
Robust Top-Line Growth
Q2 total revenue of $487.5 million, up 16% year-over-year; first half revenue grew 16% year-over-year. Organic revenue (ex‑recent Global Insights acquisitions) rose 14% for the first 6 months versus 2025.
Read all positive updates
Company Guidance
Guidance focused on strategic M&A timing, financing and near-term accretion: TMX is investing ~USD800M (contributing its BOX stake) into a USD2.3B (≈CAD3.2B) MEMX+BOX combination that would leave TMX with ~59% ownership on closing (expected H2 2027, subject to regulatory approvals), an implied 2025 valuation of ~17x combined adjusted EBITDA (combined 2025 revenue ≈USD280M and adjusted EBITDA ≈USD134M, with ~27% average revenue growth over the prior three years), and an expectation the deal will be accretive to adjusted EPS within 12 months after close; financing will be via debt (pro forma leverage could conservatively rise to ~3.4x but management targets 1.5–2.5x and expects to delever back to that range within ~2 years), with current June 30 leverage at 1.9x (net of excess cash 1.6x), cash & marketable securities >$517M (≈$273M excess over $244M regulatory buffer); management also expects RAFI Indices to close by end-Q3 (more than tripling assets under indexing vs. current VettaFi AUI ~USD90B), Cboe Australia to close imminently (Cboe Canada on a later timetable), and reiterated capital-allocation priorities (organic growth, strategic acquisitions, dividends/buybacks) while the Board raised the quarterly dividend 8% to $0.26 (payout ratio ~42%, within 40–50% target).TMX Group Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
74
Positive
Cash Flow
86
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.58B | 2.92B | 1.46B | 2.90B | 1.11B | 980.70M |
| Gross Profit | 1.40B | 1.23B | 958.80M | 2.81B | 749.30M | 662.60M |
| EBITDA | 4.67B | 2.12B | 2.46B | 2.38B | 1.57B | 658.00M |
| Net Income | 602.90M | 415.70M | 481.50M | 356.00M | 542.70M | 338.50M |
Balance Sheet | ||||||
| Total Assets | 51.39B | 50.72B | 40.21B | 64.34B | 55.98B | 63.20B |
| Cash, Cash Equivalents and Short-Term Investments | 781.80M | 757.60M | 433.40M | 419.60M | 493.10M | 341.60M |
| Total Debt | 2.06B | 2.17B | 2.17B | 1.15B | 1.11B | 1.10B |
| Total Liabilities | 46.24B | 45.75B | 35.39B | 60.02B | 51.78B | 59.49B |
| Stockholders Equity | 4.93B | 4.76B | 4.58B | 4.11B | 3.99B | 3.71B |
Cash Flow | ||||||
| Free Cash Flow | 1.18B | 566.60M | 549.70M | 459.70M | 392.20M | 390.20M |
| Operating Cash Flow | 1.43B | 687.80M | 623.40M | 524.90M | 444.10M | 441.40M |
| Investing Cash Flow | 780.60M | -259.20M | -1.17B | -289.30M | -41.40M | -203.90M |
| Financing Cash Flow | -2.01B | -387.70M | 562.60M | -309.20M | -292.90M | -194.80M |
TMX Group Technical Analysis
Positive
49.93
Price Trends
49.55
Positive
50.84
Positive
50.14
Positive
Market Momentum
0.88
Negative
60.16
Neutral
77.11
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:X, the sentiment is Positive. The current price of 49.93 is below the 20-day moving average (MA) of 50.82, above the 50-day MA of 49.55, and below the 200-day MA of 50.14, indicating a bullish trend. The MACD of 0.88 indicates Negative momentum. The RSI at 60.16 is Neutral, neither overbought nor oversold. The STOCH value of 77.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:X.
TMX Group Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | C$18.32B | 19.09 | 13.70% | 1.98% | -1.40% | 14.51% | |
78 Outperform | C$20.18B | 17.54 | 12.91% | 2.84% | 19.92% | 20.90% | |
74 Outperform | C$14.12B | 23.61 | 3.81% | 1.84% | 0.75% | 43.04% | |
74 Outperform | C$20.18B | 8.19 | 16.02% | 0.67% | -25.81% | ― | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
61 Neutral | C$1.48B | -9.93 | -17.40% | 2.42% | 26.51% | -384.81% |
* Financial Sector Average
TSE:X
TMX Group
52.14
-3.52
-6.32%
TSE:CF
Canaccord Genuity
14.37
5.14
55.65%
TSE:IGM
IGM Financial
90.20
44.37
96.80%
TSE:IAG
iA Financial Corporation Inc
212.77
73.10
52.34%
TSE:BNT
Brookfield Wealth Solutions
62.19
3.11
5.27%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.