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Why Is CME (CME) Down 4% Since Last Earnings Report?
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A month has gone by since the last earnings report for CME Group (CME - Free Report) . Shares have lost about 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 Q1 Earnings and Revenues Beat, Rise Y/Y
CME Group reported first-quarter 2023 record adjusted earnings per share of $2.42, which beat the Zacks Consensus Estimate by 2.5% and our estimate of $2.02 per share. The bottom line increased 14.7% year over year.
Quarterly results benefited from an increase in trading volumes. Average daily volume increased in three of its six asset classes.
Performance in Detail
CME Group’s revenues of $1.4 billion increased 4.8% year over year. The year-over-year increase was primarily due to higher clearing and transaction fees (up 5.4% year over year) and market data and information services (up 9.3% year over year). The top line beat the Zacks Consensus Estimate by 1.9% and our estimate of $1.2 billion.
Total expenses increased 8.3% year over year to $527.9 million, attributable to higher technology, compensation and benefits, professional fees and outside services, licensing and other fee agreements and other expenses. It exceeded our estimate of $431.4 million.
Operating income increased 6.3% from the prior-year quarter to $913.7 million and beat our estimate of $804.6 million.
Average daily volume (ADV) was 26.9 million contracts. Non-U.S. ADV reached 7.2 million contracts, which included the second-highest quarterly ADV across EMEA, Asia and Latin America. ADV increased in three of its six asset classes.
Financial Update
As of Mar 31, 2023, CME Group had $1.7 billion of cash and marketable securities, down 40.7% from 2022 end. As of Mar 31, 2023, long-term debt was $3.4 billion, down 0.02% from 2022 end.
As of Mar 31, 2023, CME Group had total equity worth $27.4 billion, up 1.9% from 2022 end.
Capital Deployment
CME Group paid out $2 billion in dividends, taking the payout to $21 billion since the implementation of the variable dividend policy in early 2012.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, CME has an average Growth Score of C, a grade with the same score on the momentum front. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, 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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Why Is CME (CME) Down 4% Since Last Earnings Report?
A month has gone by since the last earnings report for CME Group (CME - Free Report) . Shares have lost about 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 Q1 Earnings and Revenues Beat, Rise Y/Y
CME Group reported first-quarter 2023 record adjusted earnings per share of $2.42, which beat the Zacks Consensus Estimate by 2.5% and our estimate of $2.02 per share. The bottom line increased 14.7% year over year.
Quarterly results benefited from an increase in trading volumes. Average daily volume increased in three of its six asset classes.
Performance in Detail
CME Group’s revenues of $1.4 billion increased 4.8% year over year. The year-over-year increase was primarily due to higher clearing and transaction fees (up 5.4% year over year) and market data and information services (up 9.3% year over year). The top line beat the Zacks Consensus Estimate by 1.9% and our estimate of $1.2 billion.
Total expenses increased 8.3% year over year to $527.9 million, attributable to higher technology, compensation and benefits, professional fees and outside services, licensing and other fee agreements and other expenses. It exceeded our estimate of $431.4 million.
Operating income increased 6.3% from the prior-year quarter to $913.7 million and beat our estimate of $804.6 million.
Average daily volume (ADV) was 26.9 million contracts. Non-U.S. ADV reached 7.2 million contracts, which included the second-highest quarterly ADV across EMEA, Asia and Latin America. ADV increased in three of its six asset classes.
Financial Update
As of Mar 31, 2023, CME Group had $1.7 billion of cash and marketable securities, down 40.7% from 2022 end. As of Mar 31, 2023, long-term debt was $3.4 billion, down 0.02% from 2022 end.
As of Mar 31, 2023, CME Group had total equity worth $27.4 billion, up 1.9% from 2022 end.
Capital Deployment
CME Group paid out $2 billion in dividends, taking the payout to $21 billion since the implementation of the variable dividend policy in early 2012.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, CME has an average Growth Score of C, a grade with the same score on the momentum front. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CME has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.