Knight Capital Out-Jousts Peers (NITE)

Knight Capital Group Inc. (NASDAQ: NITE) is doing what other trading shops aren’t: it is winning in uncertain times.  The trading and brokerage firm posted earnings of $0.40 on revenues of $269.9 million, while First Call had estimates pegged at $0.24 EPS and $211.5 million in revenues.

Despite September getting off to a rough start, the firm said thatclients turned to it for guidance and execution on electronic tradingand on direct voice brokerage executions.  This led to market sharegains and gains in share volume traded.  Its average daily dollar valuetraded in September 2008 was up over 52% from August 2008 to $24.2billion and up almost 75% from September 2007.  Average daily equitytrade volume of 3.3 million was a gain of over 62% from August 2008 andup over 137% from September 2007.

There were some segments which weren’t great.  Its asset management operations had approximately $2.7 billion under management at October 1, 2008, down from $4.4 billion at October 1, 2007. Its Q3 corporate segment reported a pre-tax loss of $18.8 million, compared to pre-tax income of $3.9 million in the third quarter of 2007.  All in all, this is a far better report than what we are seeing from peers.

The company does not give guidance, but shares are up over 5% at $15.15this morning, and the 52-week trading range is $11.03 to $19.75.  Somefirms do well while others flounder.  You know which camp Knight fitsinto today.

Jon C. Ogg
October 22, 2008