Back to top

Image: Bigstock

CME Group (CME) Poised for Growth Despite Rising Expenses

Read MoreHide Full Article

Shares of CME Group Inc. (CME - Free Report) gained 24.33% in the last one year, outperforming the Zacks categorized Securities and Exchange industry’s increase of 23.95%. Also, the securities exchange witnessed estimates for 2017 moving north by nearly 0.4% over the last 60 days. We expect the stock to retain its momentum on the back of a number of positives.



CME Group has displayed steady organic growth over the past several years. The company witnessed an improvement in revenues due to increasing clearing and transaction fees on the back solid trading volume growth. The company expects to continue generating solid revenues in the near term, given its sturdy market position with diverse derivative product lines and global reach.

CME Group’s strong fundamentals continue to boost its operating leverage, which in turn, has provided it a leading position with about 90% market share of the global futures trading and clearing services. Also, the company strives to meet the changing needs of its clients in an evolving global marketplace.

Further, CME Group will continue to enhance shareholders’ value alongside maintaining a robust liquidity position. The company has been prudently deploying capital through dividend payouts, thereby enhancing its financial flexibility and investor confidence.

Notably, the Zacks Rank #3 (Hold) securities exchange’s stock seems to be undervalued as it is trading at 1.98x price to book multiple over a period of one year. This compares favorably with the Securities and Exchange industry’s multiple of 2.41x.

However, escalating expenses remain a concern for the securities exchange. Given the several ongoing investments in strategic initiatives, however, expenses are likely to increase further. CME Group estimates capital expenditure of $100–$110 million for 2017.

Stocks to Consider

Some better-ranked stocks from the finance sector are Health Insurance Innovations, Inc. , Fidelity & Guaranty Life , Argo Group International Holdings, Ltd. .

Health Insurance Innovations operates as a developer, distributor, and administrator of cloud-based individual health and family insurance plans, and supplemental products in the U.S. The company delivered positive surprises in all of the last four quarters with an average beat of 270.84%. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

 Fidelity & Guaranty Life offers annuities and life insurance products in the U.S. The company delivered positive surprises in two of the last four quarters with an average beat of 15.85%. The company carries a Zacks Rank #2 (Buy).

Argo Group International Holdings underwrites specialty insurance and reinsurance products in the P&C market worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 36.54%. The company holds a Zacks Rank #2.

More Stock News: 8 Companies Verge on Apple-Like Run

Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.

A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


CME Group Inc. (CME) - free report >>

Published in