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CME Group (CME) Q2 Earnings Beat on Higher Trading Volumes

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CME Group Inc. (CME - Free Report) reported second-quarter 2018 adjusted earnings per share of $1.74, beating the Zacks Consensus Estimate of $1.72 by 1.2%. Moreover, the bottom line soared 41.5% year over year.

CME Group Inc. Price, Consensus and EPS Surprise

 

CME Group Inc. Price, Consensus and EPS Surprise | CME Group Inc. Quote

This year-over-year improvement was mainly owing to higher trading volumes as well as revenues. Also, the company maintained its focus on expense discipline, leading to margin expansion in turn.

Notably, the company achieved double-digit growth across five of the six product lines, marking the reported quarter to be its second best ever performance in average quarterly daily volume, following a record feat attained in the first quarter of 2018. Moreover, CME Group witnessed solid global growth as its trading volume improved 30% in Asia and 9% in Europe.

Net income came in at $1.66 per share, which surged 36.1% year over year.

Performance in Detail

CME Group’s revenues of $1.1 billion improved 14.6% year over year. Also, the top line surpassed the Zacks Consensus Estimate by 1%. Increase in revenues can be attributable to higher clearing and transaction fees (up 14.4% year over year), market data and information services (up 18.4% year over year), access and communication fees (up 5.2% from the year-ago quarter) as well as other (up 16.4% from the prior-year period).

Total expenses increased 22.9% year over year to $392.7 million during the reported quarter, backed by higher compensation and benefits, technology support services, occupancy and building operations, professional fees and outside services, licensing and other fee agreements as well as other.

Operating income improved 10.2% to $666.9 million from the prior-year quarter.

Average daily volume (ADV) rose 11.6% year over year to 18.4 million contracts, riding on higher volumes across five of the six product lines. Average rate per contract rose in only two of the six product lines.

Financial Update

As of Jun 30, 2018, CME Group had $875 million of cash and marketable securities, which plunged 40.8% from the tally at 2017 end. As of Jun 30, 2018, long-term debt of $3.4 billion increased 53.1% from the level at year-end 2017.

As of Jun 30, 2018, the company had total assets worth $69.2 billion, down 8.7% from $75.8 billion from the level at 2017 end.

Dividend Update

During the second quarter, the company paid dividends worth $237.6 million.

Zacks Rank

CME Group carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies in Securities Exchange Industry

The bottom line of Nasdaq, Inc. (NDAQ - Free Report) and MarketAxess Holdings Inc. (MKTX - Free Report) beat the respective Zacks Consensus Estimate in the quarter under review.

Intercontinental Exchange, Inc. (ICE - Free Report) will report second-quarter results on Aug 2 before the market opens. The Zacks Consensus Estimate for the company’s quarterly earnings is pegged at 89 cents, up 18.7% year over year.

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