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CME (CME) Down 1.4% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for CME Group (CME - Free Report) . Shares have lost about 1.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CME due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CME Group Q3 Earnings and Revenues Beat Estimates on Higher Volumes
CME Group reported third-quarter 2024 adjusted earnings per share of $2.68, which beat the Zacks Consensus Estimate by 1.1%. The bottom line increased 19.1% year over year.
Quarterly results benefited from a record in trading volumes. Average daily volume increased in its six asset classes, with average daily volume (ADV) up 20% in commodities and 28% in financial markets.
Performance in Detail
CME Group’s revenues of $1.6 billion increased 18.4% year over year. The year-over-year increase was primarily due to higher clearing and transaction fees (up 19.5% year over year), market data and information services (up 6.3% year over year) and other (28.8% year over year). The top line beat the Zacks Consensus Estimate by 0.7%.
Total expenses rose 8.2% year over year to $560.2 million, attributable to higher compensation and benefits, technology, and licensing and other fee agreements. It exceeded our estimate of $500.3 million. Operating income increased 24.8% from the prior-year quarter to $1 billion. Our estimate was $954.4 million.
ADV was 28.2 million contracts, including record non-U.S. ADV, with EMEA up 30% and Asia up 28% year over year. The total average rate per contract was 66.6 cents.
Financial Update
As of Sept. 30, 2024, CME Group had $2.3 billion of cash and marketable securities, down 19.5% from the 2023-end level. As of Sept. 30, 2024, long-term debt was $2.7 billion, down 21.8% from 2023-end. As of Sept. 30, 2024, CME had shareholders' equity worth $28.2 billion, up 5.5% from the end of 2023.
Capital Deployment
CME Group paid out $419 billion in dividends, taking the payout to $25.6 billion since the implementation of the variable dividend policy in early 2012.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, CME has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise CME has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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CME (CME) Down 1.4% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for CME Group (CME - Free Report) . Shares have lost about 1.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CME due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CME Group Q3 Earnings and Revenues Beat Estimates on Higher Volumes
CME Group reported third-quarter 2024 adjusted earnings per share of $2.68, which beat the Zacks Consensus Estimate by 1.1%. The bottom line increased 19.1% year over year.
Quarterly results benefited from a record in trading volumes. Average daily volume increased in its six asset classes, with average daily volume (ADV) up 20% in commodities and 28% in financial markets.
Performance in Detail
CME Group’s revenues of $1.6 billion increased 18.4% year over year. The year-over-year increase was primarily due to higher clearing and transaction fees (up 19.5% year over year), market data and information services (up 6.3% year over year) and other (28.8% year over year). The top line beat the Zacks Consensus Estimate by 0.7%.
Total expenses rose 8.2% year over year to $560.2 million, attributable to higher compensation and benefits, technology, and licensing and other fee agreements. It exceeded our estimate of $500.3 million.
Operating income increased 24.8% from the prior-year quarter to $1 billion. Our estimate was $954.4 million.
ADV was 28.2 million contracts, including record non-U.S. ADV, with EMEA up 30% and Asia up 28% year over year. The total average rate per contract was 66.6 cents.
Financial Update
As of Sept. 30, 2024, CME Group had $2.3 billion of cash and marketable securities, down 19.5% from the 2023-end level. As of Sept. 30, 2024, long-term debt was $2.7 billion, down 21.8% from 2023-end. As of Sept. 30, 2024, CME had shareholders' equity worth $28.2 billion, up 5.5% from the end of 2023.
Capital Deployment
CME Group paid out $419 billion in dividends, taking the payout to $25.6 billion since the implementation of the variable dividend policy in early 2012.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, CME has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise CME has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.