TMX Group Ltd. (X.TO) receives Old York Operational Quality (A) Rating for fiscal year 2025
(A) | Financial | Market Infrastructure & Data
By: Old York Financial
A Private Principal Research Report
the verdict
Old York Financial has assigned TMX Group (X.TO) an Operational Quality (A) Rating. TMX is a geographic monopoly with an iron grip on the Canadian equity and derivatives landscape. In 2025, TMX successfully integrated the VettaFi acquisition, pushing its "Global Insights" (data) revenue to record levels. While it lacks the global scale of a CME or the sheer tech-royalty margins of FICO, it remains a "National Fortress." It is a steady, diversified cash cow that thrives on the resource-heavy listings of the TSX.
the old york analysis
owner earnings: the northern compounder We adjust for the high non-cash amortization resulting from the recent "Post Trade Modernization" project and acquisition costs.
2025 Reported Net Income: $415.70 Million (Estimated)
(+) Depreciation & Amortization: $160.00 Million
(–) Maintenance CapEx: ($65.00 Million)
= OLD YORK OWNER EARNINGS: $510.70 Million
Analyst Note: TMX's owner earnings consistently outperform its reported net income. This is a classic "Principal’s Signal." The business is currently expensing $10M+ annually in depreciation for its tech modernization—a cost that has already been paid in cash—leaving the actual "spendable" surplus much higher for the owner.
growth & market dominance
Total Revenue Growth (2025): 18.0% ($1.72 Billion).
Organic Revenue Growth: 15.0%.
Adj. EPS Growth (2025): 25.0% ($2.20).
Analyst Note: 2025 was TMX’s "best year ever," largely due to the explosive 31% growth in Derivatives Trading (MX). The replacement of the BAX contract with the three-month CORRA Futures (CRA) has been a masterstroke in capturing Canadian interest rate volatility. TMX is no longer just a "stock exchange"; it is an analytics and derivatives engine.
operational efficiency (the "regional moat" check)
ROIC (Return on Invested Capital): 8.8%
Old York Standard: Sovereign AAA typically requires >15%.
Analyst Note: Like Nasdaq, TMX’s ROIC is suppressed by the massive "Goodwill" and "Intangibles" ($5.0B+) sitting on its balance sheet from acquisitions like VettaFi and Trayport. While the Operating Margin is a robust 45%, the return on total capital remains in the "Fortress A" range rather than "Sovereign AAA."
the fortress check
Pricing Power: SOVEREIGN (Regional). TMX owns the only clearinghouse (CDS) and the primary exchange (TSX) for the 9th largest economy. This allows for the 9% dividend increase announced for March 2026 (their 4th increase in two years.)
The Subscription Pivot: TMX VettaFi revenue grew 24% (21% in USD) in 2025. By owning the data, the indices, and the ETF research, TMX has created a recurring "Data Toll" that is independent of market volume.
Solvency: Net Debt / EBITDA stands at ~1.7x. This is remarkably conservative compared to US peers (Nasdaq/ICE). The principal can sleep soundly knowing the "Mortgage" on this business is small and being rapidly serviced by record cash flows.
final determination
Rating: Old York Quality A
Classification: The Sovereign Canadian Gateway. TMX Group is a textbook "Owner’s Business." It owns the primary trading rails for a G7 nation and is successfully layering high-margin global data (VettaFi) on top of that infrastructure. It receives an "A" because of its geographic concentration and sub-10% ROIC, but its 1.7x leverage and 25% Adj. EPS growth make it one of the safest, highest-yielding monopolies in the Registry.
Disclaimer: Old York Financial operates privately as a principal and sells corporate advisory. Old York Financial is not an accountant, a financial advisor, a broker, an agent, a lawyer, or a portfolio manager. This report is for informational purposes only.
