About a month has gone by since the last earnings report for CME Group Inc. (CME - Free Report) . Shares have added about 1.6% 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 drivers.
CME Group Q2 Earnings Top, Revenues Lag, Expenses Fall
CME Group Inc. reported second-quarter 2017 adjusted earnings per share of $1.23, beating the Zacks Consensus Estimate of $1.20. The bottom line also increased 7.9% year over year.
Results were primarily driven by lower expenses. The quarter witnessed a record average daily volume (ADV).
Including one-time items, the net income was $1.22 per share, up 32% year over year.
Performance in Detail
CME Group’s revenues of $925 million increased 2.1% year over year. However, the reported figure missed the Zacks Consensus Estimate of $930 million. Improvement in revenues may be attributable to higher clearing and transaction fees, plus access and communication fees.
Total expenses decreased 7% year over year to $319 million during the reported quarter.
Operating income improved about 7.5% to $605.6 million from the prior-year quarter.
Average daily volume (ADV) rose 9% year over year to a record 16.5 million contracts, with growth registered across four of the six product lines. Average rate per contract increased in three of the six product lines.
As of Jun 30, 2017, CME Group had $1.4 billion of cash and marketable securities, down 26% from year-end 2016. As of Jun 30, 2017, the long-term debt of $2.2 billion inched up 0.04% from the last year-end figure.
As of Jun 30, 2017, the company had total assets worth $78.5 billion, up from $69.4 billion at year-end 2016.
The company paid dividends worth $223 million in the reported quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. While looking back an additional 30 days, we can see even more downward momentum. There has been one move higher compared to three lower two months ago.
At this time, CME Group's stock has a poor Growth Score of F, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% 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.
The company's stock is suitable solely for momentum based on our styles scores.
While estimates have been broadly trending downward for the stock, the magnitude of these revisions looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.