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CME Group (CME) to Report Q3 Earnings: What's in the Cards?

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CME Group (CME - Free Report) is slated to report third-quarter 2019 results on Oct 30, before market open.

In the last reported quarter, the company‘s earnings per share of $1.76 beat the Zacks Consensus Estimate by 0.6% and grew 1.1% year over year, driven by increase in revenues, partly offset by rise in expenses.

The company surpassed estimates in each of the last four quarters, with the average positive surprise being 1.27%.

Factors at Play

CME Group’s top line is likely to have benefited from expanded futures products in emerging markets, non-transaction related opportunities and over-the-counter offerings. Higher clearing and transaction fees as well as access and communication fees must have aided the upside. The Zacks Consensus Estimate for revenues is pegged at $1.2 billion, indicating 40.4% increase from the year-ago reported figure.

CME group boasts a premier position with about 90% market share of the global futures trading and clearing services. The Zacks Consensus Estimate for clearing and transaction fees is currently pegged at $1 billion, indicating 34.6% increase from the year-ago period reported figure.

CME reported solid third-quarter 2019 average daily volumes (“ADV”). Volumes increased 30% year over year to 20.2 million contracts per day. Four of its six product lines reported double-digit growth in ADV.

Interest Rate options ADV of 10.9 million contracts surged 39% while Equity Indexes ADV of 3.9 million contracts jumped 47%. Metals ADV increased 32% to a record 0.8 million and Energy ADV of 2.5 million increased 12%. However, Agricultural Commodities and Foreign Exchange ADV declined 2% and 10% respectively.

However, expenses are likely to have increased, given higher compensation and benefits, technology expenses, professional fees and outside services, licensing and other fee agreements, depreciation and amortization.

The Zacks Consensus Estimate for third-quarter earnings stands at $1.75, implying nearly 20.6% increase from the year-earlier quarter figure.

What Our Quantitative Model States

Our proven model does not conclusively predict an earnings beat for CME group this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: CME Group has an Earnings ESP of -0.14%. The Zacks Consensus Estimate is pegged at $1.75. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

CME Group Inc. Price and EPS Surprise

CME Group Inc. Price and EPS Surprise

CME Group Inc. price-eps-surprise | CME Group Inc. Quote

Zacks Rank: CME Group carries a Zacks Rank #2.

Stocks to Consider

Some stocks from the finance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:

Cboe Global Markets (CBOE - Free Report) , set to report third-quarter earnings on Nov 1, has an Earnings ESP of +0.72% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Athene Holding (ATH - Free Report) is set to report third-quarter earnings on Nov 5. It has an Earnings ESP of +0.09% and a Zacks Rank of 3.

American Finance Trust (AFIN - Free Report) is set to report third-quarter earnings on Nov 6. It has an Earnings ESP of +2.04% and a Zacks Rank of 3.

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