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CME Group's (CME) Earnings Lag Estimates in Q4, Drop Y/Y

Zacks Equity Research

CME Group Inc. CME reported fourth-quarter 2019 adjusted earnings per share of $1.52, which missed the Zacks Consensus Estimate by 1.3%. The bottom line also declined 14.1% year over year, mainly due to lower revenues.

Performance in Detail

CME Group’s revenues of $1.1 billion decreased 8% year over year due to lower clearing and transaction fees. Moreover, the top line missed the Zacks Consensus Estimate by 0.8%. The year-over-year softness in revenues can be attributed to lower clearing and transaction fees (down 12.9% year over year).

Total expenses dipped 3.6% year over year to $565.4 million during the reported quarter on account of weak compensation and benefits; professional fees and outside services; licensing and other fee agreements plus other expenses.

Operating income fell 11.8% from the prior-year quarter to $573 million.
Average daily volume shrank 19% year over year to 16.9 million contracts in the quarter.

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 Dec 31, 2019, CME Group had $1.6 billion of cash and marketable securities, up 12.9% from the level at 2018 end. As of Dec 31, 2019, long-term debt of $3.7 billion slipped 2.2% from the figure at 2018 end.

As of Dec 31, 2019, the company had total assets worth $75.2 billion, down 2.9% from the number at 2018 end.

Capital Deployment

CME Group declared dividends of $2 billion for 2019 including the annual variable dividend worth $894 million.  The company returned $13.2 billion to its shareholders in the form of dividends since the implementation of the variable dividend policy in early 2012.

Full-Year Update

Non-US ADV for 2019 reached a milestone of 4.9 million contracts, up 10% year over year, mainly attributable to growth in Europe, Asia and Latin America.

Total revenues for the year were $4.8 billion, up 13% year over year. Adjusted earnings per share were $6.80, down 0.3% year over year.

Zacks Rank

CME Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Securities Exchange Industry Players

Fourth-quarter earnings of Nasdaq, Inc. NDAQ, Cboe Global Markets, Inc. CBOE and MarketAxess Holdings Inc. MKTX beat the respective Zacks Consensus Estimate.

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