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CME Group (CME) Tops Q4 Earnings, Trading Volumes Surge
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CME Group Inc. (CME - Free Report) reported fourth-quarter 2016 adjusted earnings per share of $1.14, beating the Zacks Consensus Estimate of $1.10. The bottom line also improved 17.5% from the year-ago quarter.
Results of the Chicago, IL-based company – the biggest futures market operator – were primarily aided by higher revenues, partially offset by increased expenses. The quarter witnessed solid growth in average daily volume (ADV) amid increased volatility driven by the U.S. presidential election and the December Fed rate hike.
Adjusted net income of $387.3 million increased 18.4% year over year.
Including one-time items, net income was $373.4 million or $1.10 per share in the reported quarter, compared to $291.7 million or 86 cents per share.
For full-year 2016, adjusted earnings per share of $4.53 outpaced the Zacks Consensus Estimate of $4.49. Also, it improved from the prior-year figure of $4.05. Net income for 2016 was $1.54 billion, up 12.3% from the prior year.
Performance in Detail
Revenues for 2016 came in at $3.60 billion, up 8.1% year over year. The figure also came above the he Zacks Consensus Estimate of $3.58 billion.
For fourth-quarter 2016, CME Group posted total revenue of $912.9 million, surpassing the Zacks Consensus Estimate of $906 million. Revenues also climbed 12.2% year over year. The increase was driven by growth in all revenue components, including clearing and transaction fees and market data and information services revenues.
Total expenses increased 8.4% year over year at $372.7 million during the reported quarter.
Operating income improved about 15% to $540.2 million from the prior-year quarter.
ADV surged 24% year over year to 16.3 million contracts in the reported quarter. However, total average rate per contract of 73.1 cents declined from 78.9 cents in the year-ago quarter.
For 2016, ADV was a record 15.6 million contracts, jumping 12% year over year. The year witnessed strong performance in interest rates, agricultural commodities, energy, metals, total options and electronic options.
Financial Update
As of Dec 31, 2016, CME Group had $1.95 billion of cash and marketable securities, higher than $1.77 billion at year-end 2015. Long-term debt of $2.23 billion as of Dec 31, 2016, remained largely stable with the prior-year period.
As of Dec 31, 2016, the company had total assets worth $69.4 billion including trading products (intangible assets) of $17.2 billion.
Our Take
CME Group’s results reflect a solid performance. The company remains well positioned for growth given its strong market position with a diverse derivative product lines. Efforts to expand and cross sell its core exchange-traded business through strategic alliances & acquisitions, new product initiatives and global reach further support growth. However, escalating costs and stiff competition remain key concerns.
Performance of Other Companies in Securities Exchange Industry
MarketAxess Holdings Inc.'s (MKTX - Free Report) fourth-quarter 2016 earnings per share of 88 cents beat the Zacks Consensus Estimate of 83 cents. Also, the bottom line improved 35.4% from the year-ago quarter.
Nasdaq, Inc. (NDAQ - Free Report) reported fourth-quarter 2016 adjusted earnings per share of 95 cents per share, beating the Zacks Consensus Estimate by a penny. Further, the bottom line improved 7% year over year.
Among others, Intercontinental Exchange, Inc. (ICE - Free Report) is scheduled to release results on Feb 7.
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CME Group (CME) Tops Q4 Earnings, Trading Volumes Surge
CME Group Inc. (CME - Free Report) reported fourth-quarter 2016 adjusted earnings per share of $1.14, beating the Zacks Consensus Estimate of $1.10. The bottom line also improved 17.5% from the year-ago quarter.
Results of the Chicago, IL-based company – the biggest futures market operator – were primarily aided by higher revenues, partially offset by increased expenses. The quarter witnessed solid growth in average daily volume (ADV) amid increased volatility driven by the U.S. presidential election and the December Fed rate hike.
Adjusted net income of $387.3 million increased 18.4% year over year.
Including one-time items, net income was $373.4 million or $1.10 per share in the reported quarter, compared to $291.7 million or 86 cents per share.
For full-year 2016, adjusted earnings per share of $4.53 outpaced the Zacks Consensus Estimate of $4.49. Also, it improved from the prior-year figure of $4.05. Net income for 2016 was $1.54 billion, up 12.3% from the prior year.
Performance in Detail
Revenues for 2016 came in at $3.60 billion, up 8.1% year over year. The figure also came above the he Zacks Consensus Estimate of $3.58 billion.
For fourth-quarter 2016, CME Group posted total revenue of $912.9 million, surpassing the Zacks Consensus Estimate of $906 million. Revenues also climbed 12.2% year over year. The increase was driven by growth in all revenue components, including clearing and transaction fees and market data and information services revenues.
Total expenses increased 8.4% year over year at $372.7 million during the reported quarter.
Operating income improved about 15% to $540.2 million from the prior-year quarter.
ADV surged 24% year over year to 16.3 million contracts in the reported quarter. However, total average rate per contract of 73.1 cents declined from 78.9 cents in the year-ago quarter.
For 2016, ADV was a record 15.6 million contracts, jumping 12% year over year. The year witnessed strong performance in interest rates, agricultural commodities, energy, metals, total options and electronic options.
Financial Update
As of Dec 31, 2016, CME Group had $1.95 billion of cash and marketable securities, higher than $1.77 billion at year-end 2015. Long-term debt of $2.23 billion as of Dec 31, 2016, remained largely stable with the prior-year period.
As of Dec 31, 2016, the company had total assets worth $69.4 billion including trading products (intangible assets) of $17.2 billion.
Our Take
CME Group’s results reflect a solid performance. The company remains well positioned for growth given its strong market position with a diverse derivative product lines. Efforts to expand and cross sell its core exchange-traded business through strategic alliances & acquisitions, new product initiatives and global reach further support growth. However, escalating costs and stiff competition remain key concerns.
CME Group Inc. Price, Consensus and EPS Surprise
CME Group Inc. Price, Consensus and EPS Surprise | CME Group Inc. Quote
Currently, CME Group carries a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies in Securities Exchange Industry
MarketAxess Holdings Inc.'s (MKTX - Free Report) fourth-quarter 2016 earnings per share of 88 cents beat the Zacks Consensus Estimate of 83 cents. Also, the bottom line improved 35.4% from the year-ago quarter.
Nasdaq, Inc. (NDAQ - Free Report) reported fourth-quarter 2016 adjusted earnings per share of 95 cents per share, beating the Zacks Consensus Estimate by a penny. Further, the bottom line improved 7% year over year.
Among others, Intercontinental Exchange, Inc. (ICE - Free Report) is scheduled to release results on Feb 7.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>