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CME Group (CME) Q4 Earnings Beat Estimates, Revenues Dip Y/Y

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CME Group Inc. (CME - Free Report) reported fourth-quarter 2017 adjusted earnings per share of $1.12, beating the Zacks Consensus Estimate of $1.10. The bottom line, however, deteriorated 1.8% year over year.

CME Group Inc. Price, Consensus and EPS Surprise

 

CME Group Inc. Price, Consensus and EPS Surprise | CME Group Inc. Quote

 

The year-over-year decline was mainly due to lower trading volumes as well as revenues. Nonetheless, options business remained sturdy in the quarter.

Notably, the company achieved its primary goals of expansion of global customer base, innovation across its diverse product set and operational efficiency in 2017. Apart from enhancing shareholders’ value, the company was able to keep its expenses relatively flat for the third straight year.

Further, CME Group successfully launched products and saw growth in Europe and Asia outperform the level in the United States.

Including a tax benefit due to recognition of a reduction in deferred tax liabilities as a result of the Tax Cut and Jobs Act of 2017, net income was $8.63 per share, which skyrocketed 684.5% year over year.

Full-Year Highlights

For 2017, CME Group reported adjusted earnings per share of $4.77, beating the Zacks Consensus Estimate by 0.4% and improving 5.3% year over year.

Total revenues of $3.6 billion grew 1.4% year over year.

Performance in Detail

CME Group’s revenues of $900 million decreased 1.4% year over year. However, the top line beat the Zacks Consensus Estimate of $884 million by 1.8%. Decline in revenues can be attributable to lower clearing and transaction fees (down 1.3% year over year) and “other” (down nearly 33.5%).

Total expenses decreased 2.7% year over year to $362.7 million during the reported quarter, attributable to lower compensation and benefits, communications, professional fees and outside services, amortization of purchased intangibles as well as depreciation and amortization.

Operating income dipped 0.5% to $537.3 million from the prior-year quarter.

Average daily volume (ADV) declined 2.5% year over year to 15.9 million contracts due to lower volumes across three of the six product lines. Average rate per contract increased in only two of the six product lines.

Financial Update

As of Dec 31, 2017, CME Group had $2.0 billion of cash and marketable securities, up 2.1% from the 2016-end. As of Dec 31, 2017, long-term debt of $2.2 billion inched up 0.1% from the figure at year-end 2016.

As of Dec 31, 2017, the company had total assets worth $75.8 billion, up 9.3% from $69.4 billion at year-end 2016.

During 2017, the company approved dividends worth $2.1 billion including the annual variable dividend of $1.2 billion, paid in January 2018.

Zacks Rank

CME Group holds 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

The bottom line of Nasdaq, Inc. (NDAQ - Free Report) and MarketAxess Holdings Inc. (MKTX - Free Report) beat the respective Zacks Consensus Estimate in the quarter under review.

Intercontinental Exchange, Inc. (ICE - Free Report) will report fourth-quarter results on Feb 7 before the market opens. The Zacks Consensus Estimate for earnings in the period is pegged at 72 cents, up 1.4% year over year.

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