What are your thoughts about this company and it's current valuation and growth prospects?
Do you see it facing more competition?
Thanks,
X continues to impress us as a solid executor over the years. The company has a strong organic growth profile due to its solid competitive position as a main exchange in the Canadian market. The company possesses a strong profile of dividend growth. For X’s exchange business, competition remains largely unchanged, given the regulatory hurdle. However, for the company’s analytics solutions, the competitive landscape is slightly less favourable.
X’s valuation expanded slightly in recent years; the company is trading at 24x Forward P/E, compared to the previous years’ averages of around 20x. That being said, we think the valuation is justified given the company’s strategic shift from a pure exchange to a more data analytics solution provider, these businesses tend to have higher margins and predictable growth. Overall, we think X is a high-quality name, and we would be comfortable owning it for the long term.