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CME Group (CME) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

CME Group Inc. CME is set to report first-quarter 2019 earnings on May 1, before market open. The company boasts a stellar record of delivering positive earnings surprise in the last 11 quarters.

Let’s see what is in store for the company in the soon-to-be reported quarter.

Expansion of futures products in emerging markets, options business, non-transaction related opportunities and OTC offerings are likely to aid top-line growth in the to-be reported quarter. The Zacks Consensus Estimate for revenues stands at $1.2 billion, up 7.5% year over year.

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 pegged at $993 million, up nearly 2% year over year.

In first-quarter 2019, average daily volumes (ADV) declined 16% year over year to 18.6 million contracts per day on lower volumes across product lines. Energy volume of 2.3 million contracts decreased 15%. Interest rate volume of 10.3 million contracts per day declined 14% while Equity index volume of 3.2 million contracts per day decreased 23%. Also, Metals volume of 0.6 million contracts per day declined 21% whereas Foreign exchange volumes contracted 20% to 0.9 million contracts per day. Agricultural volume of 1.4 million contracts per day witnessed a decline of 13% year over year.

Despite expense discipline in place, the company may witness higher expenses in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for earnings per share is pegged at $1.60, indicating a decline of 14% from the year-ago quarter reported figure.

CME Group Inc. Price and EPS Surprise

CME Group Inc. Price and EPS Surprise | CME Group Inc. Quote

What Our Quantitative Model Predicts

Our proven model does not conclusively show that CME Group is likely to beat on earnings this reporting season. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: CME Group has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at $1.60. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: CME Group carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks from the finance sector with the perfect mix of elements to outshine estimates this time around are as follows:

AerCap Holdings N.V. AER is set to report first-quarter earnings on May 1. The company has an Earnings ESP of +1.88% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Allstate Corporation ALL has an Earnings ESP of +0.70% and a Zacks Rank of 3. The company is slated to announce first-quarter earnings on May 1.

Ares Management L.P.  ARES has an Earnings ESP of +3.20% and is a Zacks #3 Ranked player. The company is scheduled to release first-quarter earnings on May 2.

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