CMC Markets will receive a boost after the close of the London markets on the 18th of September when they are admitted to the FTSE 250 index the UK equity index that is second only to the FTSE 100 in terms of its prestige. Admission to the FTSE 250 won’t make much difference to the day to day running of the business. However, it does open CMC shares up to a wider investor base including FTSE 250 tracker funds and institutions whose mandates prevent from investing in businesses that aren’t listed in top-flight indices.
At the current price of 327.96p CMC Markets market cap is £948.18 million, not so far from the round number that is £1.0 billion – a number that is surely going to be in the mind of CEO, founder, and major shareholder Peter Cruddas.
How does CMC compare to its listed rivals?
Market leader IG Group (Ticker IGG ) is also a FTSE 250 stock but one which has a far larger market cap which is currently a whisker below the £3.0 billion mark. Plus 500 another margin trading company resident in the FTSE 250 index has a market cap of £1.56 billion currently.
We compare some other metrics between the three UK listed margin trading majors in the table below.
|Name||Revenue (m)||Pre-tax Profit (m)||P/E||Dividend Yield||Operating Margin||ROCE|
|IG Group Holdings||£649||£296||12.2||5.43%||45.59%||32.23%|
|Plus500 Ltd (DI)||$354||$189||14.1||3.41%||53.62%||65.60%|
|Name||Price||6 Mth price change||1 Year Price Change||2 Year price Change|
|IG Group Holdings||806.00p||35.46%||36.89%||-6.12%|
|Plus500 Ltd (DI)||1,477.00p||90.58%||94.96%||1.03%|
CMC Markets and Plus 500 look to be the most operationally geared of the three businesses and have a lower headcount than IG Group. Plus 500 scores well on operating margins and its return on capital employed, with a ROCE rate of roughly twice that of CMC and IG Group.
However, in terms of share price performance, its CMC markets that have been the winner over the last couple of years that share proce momentum and the associated growth in their market cap has propelled them in the FTSE 350.
The task ahead of Peter Cruddas and his team will be to maintain that newfound status and to justify investment from his potential new shareholder base.
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Darren is a veteran of the financial markets with almost 36 years of experience under his belt. He has worked in trading, sales, analytical, and research roles, he has been a regular guest & commentator on financial television channels and publications. During his career, Darren has been fortunate to act for and advise major hedge funds and investment banks as well as HNWI. Darren analyses the markets using a blend of technical and fundamental analysis