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Here's Why You Should Retain CME Group (CME) Stock Right Now
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CME Group Inc.’s (CME - Free Report) strength of its global presence, a compelling product portfolio, increased electronic trading, its focus on over-the-counter clearing services and a solid capital position make it worth retaining in one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for CME Group's 2024 earnings per share indicates a year-over-year increase of 4.6%. The consensus estimate for revenues is pegged at $5.93 billion, implying a year-over-year improvement of 6.2%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 0.6% and 2.6%, respectively, from the corresponding 2024 estimates.
Currently, the long-term earnings growth rate is 3.8%.
Northbound Estimate Revision
The Zacks Consensus Estimate for CME’s 2024 earnings has moved 0.5% north in the past 30 days. This should instill investors' confidence in the stock.
Earnings Surprise History
CME Group has a decent earnings surprise history. It beat estimates in each of the last four quarters, with the average being 3.55%.
Zacks Rank & Price Performance
CME currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has gained 8.1% compared with the industry’s growth of 15.1%.
Image Source: Zacks Investment Research
Growth Drivers
CME Group’s strength lies in its organic growth. It has a 90% market share of global futures trading and clearing services. With increased interest across the entire crypto economy, CME Group is witnessing growth in electronic trading volume and higher adoption of crypto assets. In 2023, 92% of the overall contract volume was generated through electronic trading on the CME Globex electronic platform.
Clearing and transaction fees, which contribute a major share of the top line, continue to benefit from increased volatility that aids trading volumes.
CME’s investments are also showing desirable results. It is focusing on improving margins through cost management. It expects its core expense to be $1.585 billion in 2024.
A solid capital position continues to support CME Group in deploying funds for strategic organic initiatives, expanding its product breadth and engaging in capital deployment.
CME Group, the largest futures exchange in the world in terms of trading volume as well as notional value traded, has been distributing wealth to shareholders by increasing payouts. It hiked dividends at a five-year CAGR (2019-2023) of 8%. Also, CME Group pays five dividends per year, with the fifth being variable and based on excess cash flow in a year.
Notably, its free cash flow conversion has remained more than 85% over the last many quarters, reflecting its solid earnings.
However, CME Group’s diversified product portfolio is significantly exposed to extreme interest rate volatility, currency fluctuation, strict government regulations and limited credit availability. The current unstable capital and credit markets can hamper liquidity and cause a decline in customer demand. This poses a concentration risk.
Intercontinental Exchange has a solid track record of beating earnings estimates in three of the trailing four quarters and matched in one, the average being 2.94%. In the past year, shares of ICE have jumped 29.2%.
The Zacks Consensus Estimate for ICE’s 2024 and 2025 earnings implies year-over-year growth of 6.5% and 10.7%, respectively.
The Zacks Consensus Estimate for Deutsche Boerse’s 2024 and 2025 earnings implies year-over-year growth of 0.9% and 5.9%, respectively. In the past year, shares of DBOEY have jumped 12.8%.
The Zacks Consensus Estimate for DBOEY’s 2024 and 2025 earnings has moved up 3.7% and 1.7%, respectively, in the past 30 days.
Envestnet has a solid track record of beating earnings estimates in three of the trailing four quarters and matched in one, the average being 9.36%. In the past year, shares of ENV have lost 2.3%.
The Zacks Consensus Estimate for ENV’s 2024 and 2025 earnings implies year-over-year growth of 23.5% and 14.7%, respectively.
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Here's Why You Should Retain CME Group (CME) Stock Right Now
CME Group Inc.’s (CME - Free Report) strength of its global presence, a compelling product portfolio, increased electronic trading, its focus on over-the-counter clearing services and a solid capital position make it worth retaining in one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for CME Group's 2024 earnings per share indicates a year-over-year increase of 4.6%. The consensus estimate for revenues is pegged at $5.93 billion, implying a year-over-year improvement of 6.2%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 0.6% and 2.6%, respectively, from the corresponding 2024 estimates.
Currently, the long-term earnings growth rate is 3.8%.
Northbound Estimate Revision
The Zacks Consensus Estimate for CME’s 2024 earnings has moved 0.5% north in the past 30 days. This should instill investors' confidence in the stock.
Earnings Surprise History
CME Group has a decent earnings surprise history. It beat estimates in each of the last four quarters, with the average being 3.55%.
Zacks Rank & Price Performance
CME currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has gained 8.1% compared with the industry’s growth of 15.1%.
Image Source: Zacks Investment Research
Growth Drivers
CME Group’s strength lies in its organic growth. It has a 90% market share of global futures trading and clearing services. With increased interest across the entire crypto economy, CME Group is witnessing growth in electronic trading volume and higher adoption of crypto assets. In 2023, 92% of the overall contract volume was generated through electronic trading on the CME Globex electronic platform.
Clearing and transaction fees, which contribute a major share of the top line, continue to benefit from increased volatility that aids trading volumes.
CME’s investments are also showing desirable results. It is focusing on improving margins through cost management. It expects its core expense to be $1.585 billion in 2024.
A solid capital position continues to support CME Group in deploying funds for strategic organic initiatives, expanding its product breadth and engaging in capital deployment.
CME Group, the largest futures exchange in the world in terms of trading volume as well as notional value traded, has been distributing wealth to shareholders by increasing payouts. It hiked dividends at a five-year CAGR (2019-2023) of 8%. Also, CME Group pays five dividends per year, with the fifth being variable and based on excess cash flow in a year.
Notably, its free cash flow conversion has remained more than 85% over the last many quarters, reflecting its solid earnings.
However, CME Group’s diversified product portfolio is significantly exposed to extreme interest rate volatility, currency fluctuation, strict government regulations and limited credit availability. The current unstable capital and credit markets can hamper liquidity and cause a decline in customer demand. This poses a concentration risk.
Stocks to Consider
Some better-ranked stocks from the finance sector are Intercontinental Exchange Inc. (ICE - Free Report) , Deutsche Boerse AG (DBOEY - Free Report) and Envestnet, Inc (ENV - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Intercontinental Exchange has a solid track record of beating earnings estimates in three of the trailing four quarters and matched in one, the average being 2.94%. In the past year, shares of ICE have jumped 29.2%.
The Zacks Consensus Estimate for ICE’s 2024 and 2025 earnings implies year-over-year growth of 6.5% and 10.7%, respectively.
The Zacks Consensus Estimate for Deutsche Boerse’s 2024 and 2025 earnings implies year-over-year growth of 0.9% and 5.9%, respectively. In the past year, shares of DBOEY have jumped 12.8%.
The Zacks Consensus Estimate for DBOEY’s 2024 and 2025 earnings has moved up 3.7% and 1.7%, respectively, in the past 30 days.
Envestnet has a solid track record of beating earnings estimates in three of the trailing four quarters and matched in one, the average being 9.36%. In the past year, shares of ENV have lost 2.3%.
The Zacks Consensus Estimate for ENV’s 2024 and 2025 earnings implies year-over-year growth of 23.5% and 14.7%, respectively.