Hi YXI friends,

Today, we are going to perform a holistic valuation review of the companies that are central to the everyday functioning of the financial markets, i.e. market data & analytics and exchanges & trading platforms.

This article is part 1 of the sector analysis, in which we compare the valuation metrics of the sector peers. Our next article will focus on the technical chart analysis, with trade setups.

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. EV vs TTM Revenue

The first thing we notice is that the individual company’s market cap is very much correlated with the size of their revenue, with a R-square fit of 0.897.

The problem with this correlation is that it does not account for the individual company’s growth trajectory. It could well be overvaluing companies that grow slowly, while discounting those who have a small revenue but are moving fast.

2. EV/ Revenue vs TTM Growth

Including COIN:

COIN is undoubtedly the standout stock with revenue growing by 75% while only sporting a 9.3x EV/ Revenue multiple.

Excluding COIN (so it’s easier to see others, and COIN may be too risky for some)

ICE and MCO seem best value for growth, as they are both growing near 20%, with a similar multiple to SPGI and CME.

3. EV/ NTM Revenue vs 2Y Forward CAGR

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