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CME Group Q2 ADV Rises as Volumes in 5 Product Lines Improve

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CME Group Inc.  (CME - Free Report) has reported volumes for the second quarter of 2018, marking double-digit growth across five product lines. ADV of 18.4 million contracts per day improved 12% year over year. Of this, Options volume contracted 2% year over year to average 3.5 million contracts while electronic options expanded 28% year over year with an average of 0.3 million contracts.

Shares of CME Group have outperformed the industry in second-quarter 2018. While the stock has inched up 1.8%, the industry has registered 0.7% growth.



Metals volume of 0.7 million contracts per day rose 27% whereas Interest rate volume of 9.2 million contracts grew 12% and Foreign exchange volume ascended 18% to about 1 million. Agricultural volume of about 1.7 million contracts climbed 16% year over year while Equity index volume of 3.1 million increased 14%. Only Energy volume of 2.6 million contracts was flat year over year.

High volumes in the second quarter were driven by better numbers in each month. ADV for June gained 8% to 17.8 million contracts per day, led by an increase in ADV across five of its six product lines.

Recently, securities exchange MarketAxess Holdings Ltd. (MKTX - Free Report) reported a trading volume of $147.8 billion for June.

CME Group is scheduled to report second-quarter 2018 results before market open on Jul 26. The Zacks Consensus Estimate for the company’s bottom line is pegged at $1.68 on revenues of $1.03 billion, reflecting a 36.6% surge and an 11.3% year-over-year growth, respectively.

Our proven model shows that the company is likely to deliver a positive earnings surprise with the right combination of a favorable Zacks Rank #3 (Hold) and an Earnings ESP of +2.08%.

Improved volumes across trading line should continue to fuel volume growth for CME Group. Increasing electronic trading volume adds scalability and hence leverage to the operating model. Expansion of futures products in the emerging markets plus a rise in non-transaction related opportunities as well as OTC (over the counter) offerings should continue to contribute modestly to top-line growth in the years ahead. Efforts to expand and cross-sell via strategic alliances, judicious acquisitions, product launches as well as a widening global footprint should also drive growth.

Stocks to Consider

Some better-ranked stocks from the same space are Intercontinental Exchange Inc. (ICE - Free Report) and Nasdaq Inc. (NDAQ - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intercontinental Exchange operates regulated exchanges, clearing houses and listings venues for financial and commodity markets in the United States, the United Kingdom, Continental Europe, Asia, Israel and Canada. The company came up with an average four-quarter beat of 1.27%.

Nasdaq provides trading, clearing, marketplace technology, regulatory, securities listing, information and public as well as private company services worldwide. The company delivered an average four-quarter beat of 4.80%.

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