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BGC Group, Inc. BGC has completed the acquisition of OTC Global Holdings, LP, one of the fastest-growing energy and commodities brokerage firms.
Sean Windeatt, Co-CEO of BGC Group, said, “The completion of this acquisition marks a transformative step for BGC, that firmly establishes our company as the world's premier energy, commodities, and shipping broker.”
BGC paid $325 million in cash for OTC Global and expects the deal (announced in October 2024) to be immediately accretive to its financials. Moreover, it acquired Sage Energy Partners, LP, an energy and environmental brokerage firm, last year.
The success of BGC Group's Energy, Commodities and Shipping ("ECS") business has been driven by the efforts of its new co-CEOs, John Abularrage, JP Aubin and Windeatt. Both buyouts represent an advancement in the company's growth strategy, solidifying the ECS business as the largest asset class within BGC.
ECS Acquisitions’ Expected Revenue Impact
Image Source: BGC Group, Inc.
The OTC Global deal will likely provide highly complementary synergies by combining related energy and ship broking teams. This collaboration will enhance market knowledge, generate unique trade ideas and drive deeper insights for more strategic decision-making. Also, it has an opportunity to expand Fenics Market Data’s offering across the ECS market.
The global ECS market has more than doubled in the past decade. The momentum is expected to continue, driven by growing global energy demand. Hence, increasing exposure to the ECS markets diversifies the macro drivers behind BGC Group’s business. Given the expansion of the ECS business, the company will now derive almost 33% of its revenues from there. In 2024, it was 21% of total revenues.
BGC Revenues by Asset Class
Image Source: BGC Group, Inc.
BGC Group is well-positioned to capitalize on growing environmental and energy transition trends and will keep benefiting from consistent global demand for oil, the single largest source of energy. As such, the company’s top-line growth is anticipated to be impressive.
Further, BGC Group reiterated its first-quarter 2025 revenue and adjusted pre-tax earnings view. This doesn’t include the OTC deal. Management expects revenues between $610 million and $660 million, up from $578.6 million recorded in the prior-year quarter. The company expects adjusted pre-tax earnings in the range of $145-161 million, rising from $135.4 million in the prior-year quarter.
Sales Estimates
Image Source: Zacks Investment Research
Over the past two months, the Zacks Consensus Estimate for earnings for 2025 and 2026 moved upward to $1.16 and $1.35, respectively.
BGC Estimate Revision Trend
Image Source: Zacks Investment Research
These upward adjustments reflect a positive sentiment among analysts and suggest encouraging prospects.
BGC Group Earnings Estimates
Image Source: Zacks Investment Research
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
BGC Group's stock performance has been disappointing over the past six months. The stock lost 3.5% against the industry’s growth of 15.9%. In contrast, its close peers – Tradeweb Markets Inc. TW and Interactive Brokers Group IBKR – have fared better in the past six months.
BGC Six Month Price Performance
Image Source: Zacks Investment Research
Because of weakness in its share price, BGC Group is currently trading at a forward 12-month price/earnings (P/E) of 7.67X, which is well below the industry’s 12.57X. This shows that the stock is inexpensive.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Further, BGC stock is inexpensive compared with Tradeweb and Interactive Brokers. At present, TW has a forward P/E of 42.67X, while IBKR has 23.46X.
As market volatility is expected to continue because of uncertainty over Trump’s tariff plans, client activity will likely be higher. This will drive up brokerage/commission revenues of brokerage firms like BGC, Tradeweb and Interactive Brokers. Thus, this, along with the acquisitions of OTC Global and Sage Energy, will likely support BGC Group’s financials.
Also, in December 2024, the company streamlined its operations by divesting Capitalab, a leader in Rates Portfolio Compression and Margin Optimization, for $46 million. BGC has retained its high-growth, post-trade foreign exchange risk reduction business, which was earlier included under the Capitalab brand and has now been renamed Fenics NDF Match.
Further, its inexpensive valuation and bullish analyst sentiments indicate that the stock is worth buying now. Hence, investors should consider investing their cash in BGC at its current price levels for solid long-term returns.
BGC Group currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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