Knight Capital Group Beats Up on Analysts Yet Again

Seth Jayson, The Motley Fool
Updated

Knight Capital Group (NYS: KCG) reported earnings on Jan. 19. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Knight Capital Group beat expectations on revenue and crushed expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded significantly, and earnings per share improved significantly.

Gross margins shrank, operating margins grew, and net margins increased.

Revenue details
Knight Capital Group recorded revenue of $341.3 million. The five analysts polled by S&P Capital IQ hoped for sales of $322.1 million. Sales were 32% higher than the prior-year quarter's $259.0 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.42. The eight earnings estimates compiled by S&P Capital IQ forecast $0.25 per share on the same basis. GAAP EPS of $0.43 for Q4 were 363% higher than the prior-year quarter's $0.09 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 71.4%, 50 basis points worse than the prior-year quarter. Operating margin was 19.4%, 1,440 basis points better than the prior-year quarter. Net margin was 12.2%, 850 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $310.4 million. On the bottom line, the average EPS estimate is $0.33.

Next year's average estimate for revenue is $1.25 billion. The average EPS estimate is $1.41.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 324 members out of 336 rating the stock outperform, and 12 members rating it underperform. Among 99 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 95 give Knight Capital Group a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Knight Capital Group is hold, with an average price target of $15.19.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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