In days gone by the owner and operator of the Australian Stock Exchange and the Sydney Futures Exchange, ASX Ltd (ASX: ASX), has always been on my wishlist. Historically, the ASX has operated as a monopoly which of course makes it an appealing asset. However, given every other investor has been aware of the quality of the company, price has always been the sticking point.
In more recent times, some of the ASX's quality factor has been diminished. This has primarily occurred due to the entrance of Chi-X as an alternative platform for executing orders. This new competition has had at least two noticeable effects. Firstly, it has diminished the ASX's monopoly and secondly, it has forced the ASX to slash its fees.
A combination of pressures on the ASX from both the GFC (which affected trading volumes) and Chi-X has in turn led to the ASX significantly underperforming the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO).
In fact, over the past five years the ASX's share price has gone exactly nowhere, while the Index has climbed over 37%!
It's this share price underperformance which has got me sitting up and taking notice as the ASX still has a very good business despite the competitive pressures. According to Morningstar's data, analyst consensus forecasts are for the ASX to earn 211.6 cents per share in FY 2015 and to pay a dividend of 189.1 cents. With the shares currently priced at $36.21 this equates to a price-to-earnings ratio of 17.1 and a fully franked yield of 5.2%. This doesn't make me want to buy just yet, but it is certainly starting to look appealing.
