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What's in the Offing for CME Group (CME) This Earnings Season?

·4 min read

CME Group CME is slated to report first-quarter 2021 results on Apr 28, before market open. The company delivered an earnings surprise of 2.96% in the last reported quarter.

Factors to Consider

CME Group’s first-quarter revenues are likely to have benefited from clearing and transaction fees, market data and information services and other revenues, strong market position and varied derivative product lines.

Non-transaction related opportunities, OTC offerings and its options business are likely to have contributed to top-line growth.

Revenues are likely to have benefited from increased demand for CME data, increase in cash markets business acquired from NEX, higher fixed income volume and foreign exchange volume.

The company boasts a premier position with about 90% market share of the global futures trading and clearing services. However, given the low interest rates for an extended period of time and the economic uncertainty surrounding the COVID-19 pandemic, the Zacks Consensus Estimate for clearing and transaction fees is pegged at $1 billion, indicating a decrease of 18.3% from the year-ago reported figure.

Recently, CME Group reported soft average daily volume (ADV) for the first quarter and March 2021. ADV of 21.8 million contracts per day was down 19% year over year in the first quarter due to lower volumes in all six product lines. There were 61 trading days in the first quarter of this year.

Interest rate volume of 10.3 million contracts per day fell 25%. Energy volume of 2.4 million contracts declined 27% year over year, while foreign exchange volumes dropped 21% to about 0.9 million contracts per day. Metals volume of 0.8 million contracts per day declined 24%. Moreover, Equity index volume of 6.1 million contracts per day fell 6%. Agricultural volume of 1.5 million contracts per day dropped 2%.

Lower compensation and benefits, technology, depreciation and amortization expenses are likely to have decreased expenses in the first quarter.

The Zacks Consensus Estimate for earnings per share is pegged at $1.75, indicating a decrease of 24.9% from the year-ago quarter reported figure.

What the Zacks Model Says

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. That is not the case as you can 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 are pegged at $1.75. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

CME Group Inc. Price and EPS Surprise

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 currently carries a Zacks Rank of 3.

Stocks to Consider

Some finance stocks with the right combination of elements to come up with an earnings beat this time around are:

Intercontinental Exchange ICE has an Earnings ESP of +0.77% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AMERISAFE AMSF has an Earnings ESP of +0.46% and a Zacks Rank #3.

Aon AON has an Earnings ESP of +0.79 and a Zacks Rank of 3.

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