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

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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%.

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