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

Zacks Equity Research

CME Group Inc. CME is set to report second-quarter 2019 earnings on Jul 31, before market open. The company boasts a stellar record of delivering positive earnings surprise in the last 12 quarters.

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

CME Group’s second-quarter results are likely to be driven by its strong market position and varied derivative product lines.

Non-transaction related opportunities, OTC offerings and its options business are likely to contribute to top-line growth. The Zacks Consensus Estimate for revenues stands at $1.3 billion, indicating an upside of 20.9% from the year-ago reported figure.

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 $986 million, indicating an increase of 8.8% from the year-ago reported figure.

In second-quarter 2019, average daily volumes (ADV) increased 14% year over year to 20.9 million contracts per day. This marks the second-highest quarterly volume. Record quarterly ADV was reported in Agricultural Commodities, Interest Rate options, Agricultural options and Metals options.

Agricultural Commodities ADV of 1.8 million contracts increased 6% while Interest Rate options ADV of 3.3 million contracts surged 56%. Agricultural options ADV improved 10% to 359,000 contracts and Agricultural options ADV increased 10% to 359,000 contracts.

Despite expense discipline, CME Group is likely to witness higher expenses in the second quarter.

The Zacks Consensus Estimate for earnings per share is pegged at $1.75, indicating an increase of 0.6% from the year-ago quarter reported figure.

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 $1.75. 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-eps-surprise | CME Group Inc. Quote

Zacks Rank: CME Group carries a Zacks Rank #2, 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:

Artisan Partners Asset Management APAM has an Earnings ESP of +0.25% and is a Zacks #1 Ranked player. The company is scheduled to release second-quarter earnings on Jul 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amerisafe, Inc. AMSF has an Earnings ESP of +4.35% and a Zacks Rank of 3. The company is slated to announce second-quarter earnings on Jul 31.

Intercontinental Exchange ICE is set to report second-quarter earnings on Aug 1. The company has an Earnings ESP of +0.36% and a Zacks Rank #2.

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