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Why Should You Stay Invested in CME Group (CME) Stock Now?

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CME Group Inc. (CME - Free Report) is well poised for growth, given its global presence, compelling product portfolio, and focus on over-the-counter clearing services. Its effective capital deployment and favorable growth estimates make it worth retaining in one’s portfolio.

CME Group has a decent surprise history, having surpassed earnings estimates in the last eight quarters.

Zacks Rank and Price Movement

This largest futures exchange in the world, in terms of trading volume as well as notional value, currently carries a Zacks Rank #3 (Hold). Shares of CME Group have lost 24.2% year to date, compared with the industry’s decline of 36.2%.

Zacks Investment Research
Image Source: Zacks Investment Research

Optimistic Growth Projection

The Zacks Consensus Estimate for 2023 earnings is pegged at $8.32, indicating a year-over-year improvement of 4.3% on 2.7% higher revenues of $5.2 billion.

The expected long-term earnings growth rate is pegged at 7.8%.

Northbound Estimate Movement

The consensus estimate for 2022 and 2023 earnings has moved up by a cent in the past seven days, implying analysts’ optimism.

Business Tailwinds

CME Group has a solid market presence with a 90% market share of the global futures trading and clearing services. Increasing electronic trading volume adds scalability and hence leverage to CME Group’s operating model.

Its clearing and transaction fees should continue to benefit from higher trading volumes, which in turn, are driven by increased volatility. Increased adoption of a greater number of crypto assets with increased interest across the entire crypto economy should add to the upside.

Higher non-transactional revenues should boost the top line as well.

Banking on operational excellence, CME Group has a solid balance sheet and financial flexibility. These, in turn, support strategic growth initiatives, including organic market data growth and new product extensions and offerings. Prudent capital deployment continues to enhance shareholders’ value.

CME Group has an impressive dividend history, having increased dividends at a five-year CAGR (2018-2022) of 8.7%. The dividend yield is 2%, better than the industry average of 1.1%, making the stock an attractive pick for yield-seeking investors.

Stocks to Consider

Some better-ranked stocks from the finance sector are Kinsale Capital Group, Inc. (KNSL - Free Report) , Cboe Global Markets (CBOE - Free Report) and W.R. Berkley Corporation (WRB - Free Report) .

Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average being15.2%. Year to date, Kinsale Capital has gained 23.2%.

The Zacks Consensus Estimate for KNSL’s 2023 earnings implies a year-over-year rise of 22.4%. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of Cboe Global surpassed earnings estimates in three of the last four quarters and missed in one, the average beat being 4.92%. Year to date, CBOE has lost 3.7%.

The Zacks Consensus Estimate for Cboe Global’s 2023 earnings indicates an increase of 3.4% and has moved 0.6% north in the past seven days. It carries a Zacks Rank #2 (Buy).

W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 25.63%. Year to date, W.R. Berkley stock has gained 36.5%.

The Zacks Consensus Estimate for WRB’s 2023 earnings per share indicates a year-over-year increase of 11.4%. It carries a Zacks Rank #2.

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