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CME Group (CME) Stock Surges 27% YTD: More Upside Left?
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CME Group’s (CME - Free Report) shares have rallied 26.6% year to date, outperforming the Finance sector’s increase of 14.2% and the Zacks S&P 500 composite’s rise of 24.1% in the same period. With a market capitalization of $76.7 billion, the average volume of shares traded in the last three months was 1.7 million.
A solid global presence, compelling product portfolio, focus on over-the-counter clearing services and a solid capital position continue to drive CME, carrying a Zacks Rank #3 (Hold).
This largest futures exchange in the world in terms of trading volume as well as notional value traded has a solid history of delivering earnings surprises in the last 12 reported quarters. Its earnings grew 8.2% in the last five years.
Can It Retain the Momentum?
The Zacks Consensus Estimate for CME Group’s 2024 earnings is pegged at $9.41, indicating an increase of 2.9% on 4% higher revenues of $5.7 billion. The long-term earnings growth rate is currently pegged at 10%, better than the industry average of 7.4%. We estimate the bottom line to increase at a three-year (2022-2025) CAGR of 4.4%.
CME Group’s strength lies in its organic growth. We estimate the 2025 top line to witness a three-year CAGR of 5.5%, fueled by clearing and transaction fees that contribute the lion’s share. Increased volatility aids higher trading volumes, which, in turn, fuel clearing and transaction fees. We estimate clearing and transaction fees to increase at a three-year CAGR (2022-2025) of 5.2%.
Volumes are poised to benefit. CME has a 90% market share of global futures trading and clearing services. It is witnessing growth in electronic trading volume and higher adoption of crypto assets with increased interest across the entire crypto economy. CME’s investments are showing desirable results.
The company is focusing on improving margins through cost management. It expects its core expense to be $1.475 billion in 2023, a $15 million decrease from the original guidance of $1.49 billion.
CME Group has been accelerating organic market data growth, expanding its product breadth, and engaging in capital deployment by virtue of its solid capital position.
CME Group has been enhancing shareholders' value by increasing payouts. It hiked dividends at a five-year CAGR (2019-2023) of 8%. Its dividend yield is 2.2%, better than the industry average of 1.6%, making the stock an attractive pick for yield-seeking investors. Also, CME Group pays five dividends per year, with the fifth being variable and based on excess cash flow in the year.
Notably, its free cash flow conversion has remained more than 85% over the last many quarters, reflecting its solid earnings.
Estimates for Deutsche Boerse’s 2024 earnings per share indicate a year-over-year increase of 4%. Year to date, DBOEY has gained 15.7%. The expected long-term earnings growth rate is 10.2%, better than the industry average of 7.4%.
Coinbase has a decent track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 62.95%. COIN stock has climbed 360.8% Year to date. The Zacks Consensus Estimate for COIN’s 2024 earnings per share indicates a year-over-year increase of 30.4%.
Berkshire delivered a trailing four-quarter average earnings surprise of 0.20%. Year to date, the stock has risen 19.8%. The Zacks Consensus Estimate for BRK.B’s 2024 earnings suggests a year-over-year rise of 11.2%.
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CME Group (CME) Stock Surges 27% YTD: More Upside Left?
CME Group’s (CME - Free Report) shares have rallied 26.6% year to date, outperforming the Finance sector’s increase of 14.2% and the Zacks S&P 500 composite’s rise of 24.1% in the same period. With a market capitalization of $76.7 billion, the average volume of shares traded in the last three months was 1.7 million.
A solid global presence, compelling product portfolio, focus on over-the-counter clearing services and a solid capital position continue to drive CME, carrying a Zacks Rank #3 (Hold).
This largest futures exchange in the world in terms of trading volume as well as notional value traded has a solid history of delivering earnings surprises in the last 12 reported quarters. Its earnings grew 8.2% in the last five years.
Can It Retain the Momentum?
The Zacks Consensus Estimate for CME Group’s 2024 earnings is pegged at $9.41, indicating an increase of 2.9% on 4% higher revenues of $5.7 billion. The long-term earnings growth rate is currently pegged at 10%, better than the industry average of 7.4%. We estimate the bottom line to increase at a three-year (2022-2025) CAGR of 4.4%.
CME Group’s strength lies in its organic growth. We estimate the 2025 top line to witness a three-year CAGR of 5.5%, fueled by clearing and transaction fees that contribute the lion’s share. Increased volatility aids higher trading volumes, which, in turn, fuel clearing and transaction fees. We estimate clearing and transaction fees to increase at a three-year CAGR (2022-2025) of 5.2%.
Volumes are poised to benefit. CME has a 90% market share of global futures trading and clearing services. It is witnessing growth in electronic trading volume and higher adoption of crypto assets with increased interest across the entire crypto economy. CME’s investments are showing desirable results.
The company is focusing on improving margins through cost management. It expects its core expense to be $1.475 billion in 2023, a $15 million decrease from the original guidance of $1.49 billion.
CME Group has been accelerating organic market data growth, expanding its product breadth, and engaging in capital deployment by virtue of its solid capital position.
CME Group has been enhancing shareholders' value by increasing payouts. It hiked dividends at a five-year CAGR (2019-2023) of 8%. Its dividend yield is 2.2%, better than the industry average of 1.6%, making the stock an attractive pick for yield-seeking investors. Also, CME Group pays five dividends per year, with the fifth being variable and based on excess cash flow in the year.
Notably, its free cash flow conversion has remained more than 85% over the last many quarters, reflecting its solid earnings.
Stocks to Consider
Some top-ranked stocks from the finance sector are Deutsche Boerse (DBOEY - Free Report) , Coinbase Global (COIN - Free Report) and Berkshire Hathaway Inc. (BRK.B - Free Report) , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Estimates for Deutsche Boerse’s 2024 earnings per share indicate a year-over-year increase of 4%. Year to date, DBOEY has gained 15.7%. The expected long-term earnings growth rate is 10.2%, better than the industry average of 7.4%.
Coinbase has a decent track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 62.95%. COIN stock has climbed 360.8% Year to date. The Zacks Consensus Estimate for COIN’s 2024 earnings per share indicates a year-over-year increase of 30.4%.
Berkshire delivered a trailing four-quarter average earnings surprise of 0.20%. Year to date, the stock has risen 19.8%. The Zacks Consensus Estimate for BRK.B’s 2024 earnings suggests a year-over-year rise of 11.2%.