Share market operator ASX Ltd (ASX: ASX) has released a solid set of half year results for the six-month period ending December 31.

Result highlights:

  • Operating revenues grew 7.9% to $376 million
  • Operating expenses of $85 million were contained to a 4.4% increase
  • Profits expanded 7.3% to $213 million
  • Earnings per share increased to 110.2 cents per share (cps)
  • The interim fully franked dividend was up by 7.4% to 99.1 cps

Operational highlights:

  • The listings and Issuer Services segment achieved a 15.6% surge in revenues with the division benefiting from 77 initial public offerings and a 41.5% leap in total capital raised
  • The Trading Services segment achieved an 8.1% increase in revenues on the back of double-digit growth in cash market trading revenue and information services revenue. Technical services revenue increased 1%
  • The Equity Post-Trade Services segment also performed strongly, recording an 11.7% increase in revenue thanks to growth in clearing and settlement of cash market equity transactions
  • The Derivatives and Over-the-Counter Markets segment – which is the ASX’s single-largest division – produced a flat revenue result due to additional fee discounts which were introduced in the second quarter

Buy, Hold or Sell?

Given the rocky start to the 2016 calendar year some investors may be a little timid regarding the full year outlook for ASX Ltd.

Based on consensus data, ASX is forecast to earn 217.6 cps for the full year (source: Thomson Consensus Estimates). That consensus forecast would seem achievable considering the earnings produced in the first half and implies that the stock is trading on a price-to-earnings multiple of 18 times. Given the quality of the ASX’s businesses and on a comparative basis to market averages that would arguably appear a fair price for the stock.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. 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. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.