Beyond the yield, though, NYSE Euronext is a real turnaround story. The company’s regaining market share, successfully integrating its AMEX and Euronext acquisitions and there’s even takeover talk.
NYSE’s seen a market share increase for two straight months, a vast improvement when you consider that from 2005 to 2008 the company went from controlling 80% of the total NYSE-listed stock trading volume to just 40%. But a new market model that speeds up order executions, improves price discovery and reduces volatility, as well as a Universal Trading Platform to unify NYSE’s different markets, has helped the company regain some of its foothold.
Synergies and cost-cutting at AMEX and Euronext are also starting to take shape. Staff reductions at both divisions should equal as much as $170 million in savings by 2010. The AMEX buyout also put 680 of the 830 listed exchange-traded funds in the U.S. under the NYSE umbrella. And the London International Financial Futures and Options Exchange, which was a part of the Euronext merger, is bringing European derivatives clearing in house for 2009 and could generate as much as $100 million for NYSE in just a couple of years.
Add to this that reports say NYSE’s been talking with Deutsche Bourse about a merger, though neither company has confirmed the speculation. Both stocks have already moved as a result, but an actual deal, Cramer said, would move them much more.
While Cramer would normally recommend waiting for a pullback in this stock before buying, even Thursday’s closing price of just under $26 gets you Euronext for free. NYSE paid $10 billion for the overseas exchange, but the entire market cap of the combined company right now is just $7.3 billion. Even the enterprise value – the amount a buyer would have to pay to acquire NYSE-Euronext – is only $9 billion.
So with NYSE taking share, cutting costs and offering such a nice yield, “it’s time for this company to leave the Sell Block,” Cramer said, “and return to the world of buy, buy, buy.”
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