CMC Markets upgrades sharpen focus on trading platform earnings outlook

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CMC Markets earnings outlook

Highlights

CMC Markets posts £101 million pre-tax profit for year to March 31, 5 percent below consensus, but raises FY2027 net operating income guidance to £460–£480 million, indicating 17–22 percent year-on-year growth.
CMC benefits from volatility-driven trading activity and expanding technology partnerships with Revolut and Westpac, with Jefferies and RBC Capital Markets analysts turning more positive as earnings improve.
CMC trades at a 12.7 trailing P/E, similar to IG Group, but sector faces ongoing regulatory risk in the UK and potential U.S. listing shifts after IG’s venue review.

Broker outlook and company trading updates

As reported by Financial Times, CMC Markets is drawing investor interest after stronger forward guidance offset a softer-than-expected annual result. The trading platform says pre-tax profit for the year to March 31 comes in at £101 million, 5 percent below consensus, but it forecasts full-year 2027 net operating income of £460 million to £480 million, implying year-on-year growth of 17 percent to 22 percent.

Its business model is benefiting not only from market volatility, which tends to lift client trading activity and fee income, but also from longer-term technology partnerships. Revolut in the UK and Australia's Westpac are among the groups using CMC's infrastructure to provide trading services to their own customers, while Jefferies and RBC Capital Markets analysts have both turned more positive on the stock as earlier investment starts to feed through into earnings.

VP, the equipment hire group, is navigating a weaker construction backdrop after falling into a statutory pre-tax loss as revenue declined. UK sales drop 11 percent, although the group completes a restructuring, maintains its dividend and keeps leverage below target, while adjusted profit of £27 million is in line with revised guidance of £26 million to £29 million.

Management expects the new financial year to track market expectations, supported by infrastructure demand. That points to revenue of £352 million, adjusted profit of £33 million and net debt of £151 million, while the shares trade on eight times forward consensus earnings for full-year 2027 and offer a dividend yield above 8 percent.

Sector valuation and UK consumer demand risks

CMC's valuation still reflects caution despite recent earnings upgrades. Its trailing price-to-earnings ratio of 12.7 is broadly in line with levels seen two or three years ago and comparable with larger peer IG Group, even as management argues the company is at a key inflection point as partnerships expand.

One constraint for the sector remains the risk of tighter regulation. Existing UK rules already require firms such as CMC and IG to disclose that more than two-thirds of customers lose money on spread bets and contracts for difference, and IG said in March it was reviewing domicile and listing venues, raising the prospect that U.S. markets could look more attractive for listed trading platforms.

Motorpoint offers a different read-across for investors, with record retail vehicle sales volumes of 64,600 units and a final dividend that more than doubles. Gross profit rises 9 percent to £98.9 million and return on capital employed improves to 67.2 percent from 46.6 percent, but the company still faces broader uncertainty from inflation, interest rate risks and a UK car market that remains below pre-2019 registration averages.

In our earlier report on UK retail demand for SpaceX shares, we noted that applications far exceeded the stock available, leading to scaled-back allocations for most investors. We also explained that the surge was enabled by new FCA fundraising rules and was channelled through major platforms including CMC Markets, Revolut and IG, highlighting how regulation and platform access can quickly amplify retail participation.

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