Back to top

CME Group's September Volumes Solid, Q3 Volumes Down Y/Y

Read MoreHide Full Article

CME Group Inc. (CME - Free Report) reported a solid average daily volume (ADV) for September 2018. ADV of 17.5 million contracts per day improved 3% year over year. The company witnessed an increase in ADV in three of its six product lines.

Metals volume of 0.6 million contracts per day declined 9% whereas Energy volume of 2.5 million contracts decreased 6%. Foreign exchange volumes too contracted 10% to 1.1 million contracts per day. Nonetheless, Interest rate volume of 8.6 million contracts per day rose 5% while Equity index volume of 3.4 million contracts per day increased 9%. Agricultural volume of about 1.3 million contracts per day registered an ascent of 12% year over year.

Concurrently, the company announced ADV for the third quarter of 2018.  ADV was 15.6 million contracts, slipping 1% year over year as three product lines witnessed lower volume. Energy volumes decreased 18%, Foreign exchange declined 3% and Agricultural Commodities volume was low by 2%. However, a 2% increase, each in Metals and Equity Indexes volume and a 5% improvement in Interest Rates volume limited the downside.

CME Group is expected to report third-quarter results in the last week of October. The Zacks Consensus Estimate is pegged at $1.48, reflecting a year-over-year increase of 24.4% on 6.3% higher revenues. Our proven model does not conclusively show that the company is likely to beat on earnings this time around. While a Zacks Rank #3 (Hold) increases the predictive power of ESP, an Earnings ESP of -3.38% leaves surprise prediction inconclusive. The company delivered positive surprises in all the last four quarters with an average beat of 1.53%.

Recently, securities exchange MarketAxess Holdings Ltd. (MKTX - Free Report) also posted September volumes. Its trading volume came in at $136.6 billion.

Shares of CME Group have outperformed the industry in a year. While the stock has rallied 19.5%, the industry has registered a 12.2% rise.



CME Group’s improving volumes are driven by a solid operating leverage, helping it maintain an enormous market share. The company holds about 90% market share of the global futures trading and clearing services. Expansion of futures products in the emerging markets plus an increase in non-transaction related opportunities as well as OTC offerings should continue to contribute modestly to its top-line growth in years ahead. Increasing electronic trading volume adds scalability and hence leverage to CME Group’s operating model. Efforts to expand and cross-sell through strategic alliances, acquisitions, new product initiatives and a strong global presence should also drive growth.

CME Group carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks from the same industry are Nasdaq, Inc. (NDAQ - Free Report) and Cboe Global Markets, Inc. (CBOE - Free Report) , both sporting a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nasdaq provides trading, clearing, marketplace technology, regulatory, securities listing, information, and public and private company services worldwide. The company delivered an average four-quarter beat of 3.45%.

Cboe Global Markets operates as an options exchange in the United States. The company came up with an average four-quarter positive surprise of 2.65%.

Best Electric Car Stock? You'll Never Guess It.

Zacks Research has released a report that may shock many investors. One stock stands out as the best way to invest in the surge to electric cars. And it's not the one you may think!

Much like petroleum 150 years ago, lithium battery power is set to shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, revenues that were already at $31 billion in 2016 are expected to blast to over $67 billion by the end of 2022.

See Zacks Best EV Stock Free >>



More from Zacks Analyst Blog

You May Like

Published in