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Why Is CME (CME) Up 12.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for CME Group (CME - Free Report) . Shares have added about 12.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CME 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 drivers.
CME Group Q4 Earnings and Revenues Beat Estimates
CME Group reported fourth-quarter 2020 adjusted earnings per share of $1.39, which beat the Zacks Consensus Estimate by 3%. The bottom line decreased 8.6% year over year due to lower clearing and transaction fees and market data and information services. Average daily volume decreased in three out of the six products lines.
Nonetheless, the company witnessed strong, double-digit, year-over-year growth in the fourth quarter across its Equity Index and Agricultural businesses.
Performance in Detail
CME Group’s revenues of $1.1 billion decreased 3.5% year over year. The year-over-year decrease was primarily due to lower clearing and transaction fees (down 6.4% year over year) and market data and information services (down 3.5% year over year). The top line however beat the Zacks Consensus Estimate by 0.3%.
Total expenses increased 3.2% year over year to $583.5 million during the reported quarter, attributable to higher professional fees and outside services and licensing and other fee agreements
Operating income decreased 10.1% from the prior-year quarter to $515 million.
Average daily volume decreased 3.8% year over year to 16.2 million contracts in the quarter. Average rate per contract decreased 2.5%.
Full-Year Highlights
Adjusted earnings of $6.72 per share declined 1.2% year over year but topped the consensus estimate of $6.69.
Operating revenues of $4.9 billion for 2020 increased 0.3% year over year and marginally beat the consensus estimate.
The company achieved record international volume during 2020.
Financial Update
As of Dec 31, 2020, CME Group had $1.6 billion of cash and marketable securities, up 5.3% from 2019 end. As of Dec 31, 2019, long-term debt of $3.4 billion decreased 8% from 2019 end.
As of Dec 31, 2020, the company had total equity worth $26.3 billion, up 0.7% from 2019 end.
Capital Deployment
CME Group has returned about $15.3 billion to shareholders in the form of dividends since the implementation of the variable dividend policy in early 2012.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, CME has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CME has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is CME (CME) Up 12.5% Since Last Earnings Report?
A month has gone by since the last earnings report for CME Group (CME - Free Report) . Shares have added about 12.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CME 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 drivers.
CME Group Q4 Earnings and Revenues Beat Estimates
CME Group reported fourth-quarter 2020 adjusted earnings per share of $1.39, which beat the Zacks Consensus Estimate by 3%. The bottom line decreased 8.6% year over year due to lower clearing and transaction fees and market data and information services. Average daily volume decreased in three out of the six products lines.
Nonetheless, the company witnessed strong, double-digit, year-over-year growth in the fourth quarter across its Equity Index and Agricultural businesses.
Performance in Detail
CME Group’s revenues of $1.1 billion decreased 3.5% year over year. The year-over-year decrease was primarily due to lower clearing and transaction fees (down 6.4% year over year) and market data and information services (down 3.5% year over year). The top line however beat the Zacks Consensus Estimate by 0.3%.
Total expenses increased 3.2% year over year to $583.5 million during the reported quarter, attributable to higher professional fees and outside services and licensing and other fee agreements
Operating income decreased 10.1% from the prior-year quarter to $515 million.
Average daily volume decreased 3.8% year over year to 16.2 million contracts in the quarter. Average rate per contract decreased 2.5%.
Full-Year Highlights
Adjusted earnings of $6.72 per share declined 1.2% year over year but topped the consensus estimate of $6.69.
Operating revenues of $4.9 billion for 2020 increased 0.3% year over year and marginally beat the consensus estimate.
The company achieved record international volume during 2020.
Financial Update
As of Dec 31, 2020, CME Group had $1.6 billion of cash and marketable securities, up 5.3% from 2019 end. As of Dec 31, 2019, long-term debt of $3.4 billion decreased 8% from 2019 end.
As of Dec 31, 2020, the company had total equity worth $26.3 billion, up 0.7% from 2019 end.
Capital Deployment
CME Group has returned about $15.3 billion to shareholders in the form of dividends since the implementation of the variable dividend policy in early 2012.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, CME has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CME has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.