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CME Group (CME) Up 4% Since Earnings Report: Can It Continue?
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More than a month has gone by since the last earnings report for CME Group Inc. (CME - Free Report) . Shares have added about 4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
CME Group Q3 Earnings Beat on Higher Trading Volumes
CME Group Inc. reported third-quarter 2017 adjusted earnings per share of $1.19, beating the Zacks Consensus Estimate of $1.16. The bottom line also improved 13.3% year over year.
Results were primarily driven by higher trading volumes. Options business remained sturdy in the quarter.
Including one-time items, the net income was 91 cents per share, down 34.5% year over year.
Performance in Detail
CME Group’s revenues of $891 million increased 5.8% year over year. This reported figure marginally beat the Zacks Consensus Estimate of $890 million. Improvement in revenues may be attributable to higher clearing and transaction fees (up 7% year over year), plus access and communication fees (up nearly 8%).
Total expenses increased 2.1% year over year to $322.9 million during the reported quarter, attributable to a rise in compensation and benefits, technology support services as well as licensing and other fee agreements.
Operating income improved about 8.1% to $567.9 million from the prior-year quarter.
Average daily volume (ADV) rose 10% year over year to a record 15.7 million contracts with growth across five of the six product lines. Average rate per contract increased in only one of the six product lines.
Financial Update
As of Sep 30, 2017, CME Group had $1.7 billion of cash and marketable securities, down 10% from the year-end 2016. As of Sep 30, 2017, long-term debt of $2.2 billion inched up 0.1% from year-end 2016 figure. As of Sep 30, 2017, the company had total assets worth $78.3 billion, up from $69.4 billion at year-end 2016. The company paid dividends worth $224 million in the reported quarter.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. While looking back an additional 30 days, we can see even more downward momentum. There have been five moves down in the last two months. In the past month, the consensus estimate has shifted lower by 5.8% due to these changes.
Currently, CME Group's stock has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. Following the exact same course, the stock was allocated also a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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CME Group (CME) Up 4% Since Earnings Report: Can It Continue?
More than a month has gone by since the last earnings report for CME Group Inc. (CME - Free Report) . Shares have added about 4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
CME Group Q3 Earnings Beat on Higher Trading Volumes
CME Group Inc. reported third-quarter 2017 adjusted earnings per share of $1.19, beating the Zacks Consensus Estimate of $1.16. The bottom line also improved 13.3% year over year.
Results were primarily driven by higher trading volumes. Options business remained sturdy in the quarter.
Including one-time items, the net income was 91 cents per share, down 34.5% year over year.
Performance in Detail
CME Group’s revenues of $891 million increased 5.8% year over year. This reported figure marginally beat the Zacks Consensus Estimate of $890 million. Improvement in revenues may be attributable to higher clearing and transaction fees (up 7% year over year), plus access and communication fees (up nearly 8%).
Total expenses increased 2.1% year over year to $322.9 million during the reported quarter, attributable to a rise in compensation and benefits, technology support services as well as licensing and other fee agreements.
Operating income improved about 8.1% to $567.9 million from the prior-year quarter.
Average daily volume (ADV) rose 10% year over year to a record 15.7 million contracts with growth across five of the six product lines. Average rate per contract increased in only one of the six product lines.
Financial Update
As of Sep 30, 2017, CME Group had $1.7 billion of cash and marketable securities, down 10% from the year-end 2016. As of Sep 30, 2017, long-term debt of $2.2 billion inched up 0.1% from year-end 2016 figure. As of Sep 30, 2017, the company had total assets worth $78.3 billion, up from $69.4 billion at year-end 2016. The company paid dividends worth $224 million in the reported quarter.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. While looking back an additional 30 days, we can see even more downward momentum. There have been five moves down in the last two months. In the past month, the consensus estimate has shifted lower by 5.8% due to these changes.
CME Group Inc. Price and Consensus
CME Group Inc. Price and Consensus | CME Group Inc. Quote
VGM Scores
Currently, CME Group's stock has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. Following the exact same course, the stock was allocated also a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.