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CME Group (CME) Q3 Earnings and Revenues Top Estimates

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CME Group Inc. (CME - Free Report) reported third-quarter 2019 adjusted earnings per share of $1.90, which beat the Zacks Consensus Estimate by 8.6%. The bottom line increased 31% year over year. The upside was driven by solid trading volumes.

Performance in Detail    

CME Group’s revenues of $1.3 billion increased 41.3% year over year. The top line beat the Zacks Consensus Estimate by 0.6%. The year-over-year increase in revenues can be attributed to higher clearing and transaction fees (up 38.3% year over year),  market data and information services (up 17.3% year over year), and other (up 160% from the prior-year period).

Total expenses increased 67.1% year over year to $592.1 million during the reported quarter, attributable to higher compensation and benefits, technology expenses, professional fees and outside services, licensing and other fee agreements, depreciation and amortization as well as other.

Operating income increased 24.6% from the prior-year quarter to $685.2 million.

Average daily volume increased 30% year over year to 20.2 million contracts in the quarter. The upside was driven by strong, double-digit growth in interest rates, equity index and metals products, as well as robust trading volumes outside the United States.  Options products and newer, innovative contracts like SOFR and Micro E-mini Equity futures contributed to substantial volume growth during the quarter.

CME Group's ADV transacted outside the United States reached 5.3 million contracts during the quarter, up 40% year over year, including 34% growth in Europe, 61% growth in Asia and 87% growth in greater Latin America.

CME Group Inc. Price, Consensus and EPS Surprise

CME Group Inc. Price, Consensus and EPS Surprise

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

Financial Update

As of Sep 30, 2019, CME Group had $1.2 billion of cash and marketable securities, down 10.9% from 2018 end. As of Sep 30, 2019, long-term debt of $3.9 billion increased 1.2% from 2018 end.

As of Sep 30, 2019, the company had total assets worth $79.4 billion, up 2.5% from 2018 end.

Capital Deployment

CME Group paid $268 million in dividends in the third quarter.  The company has returned about $12 billion to shareholders in the form of dividends since the implementation of the variable dividend policy in early 2012.

Zacks Rank

CME Group currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Securities Exchange Industry Players

Third-quarter earnings of Nasdaq (NDAQ - Free Report) and MarketAxess Holdings (MKTX - Free Report) beat the Zacks Consensus Estimate.

Upcoming Release

Intercontinental Exchange (ICE - Free Report) is slated to report its second-quarter results on Oct 31, before market open. The Zacks Consensus Estimate is pegged at 92 cents, indicating 11.8% increase from the year-ago reported figure.

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