CME Group Inc. ( CME )
reported second-quarter 2012 operating earnings per share of 89
cents, surpassing the Zacks Consensus Estimate of 82 cents and the
year-ago quarter's earnings of 88 cents. The earnings per share
include the effect of a 5-for-1 common stock split on July 20,
Net operating income creeped up 0.9% year over year to $296.3
million. This excluded the effect of benefit within tax expense
associated with a change in the expected effective tax rate and its
impact on the deferred tax expense along with a non-operating
income, compensation expenses and non-controlling interest related
to the de-consolidation of CME's business into S&P Dow Jones
Including these adjustments, the quarterly GAAP net income was
$244.9 million or 74 cents per share. However, no such
extraordinary items were recorded in the year-ago quarter.
CME Group's total revenue for the reported quarter declined 5.1%
year over year to $795.9 million, though it was almost at par with
the Zacks Consensus Estimate of $796 million. The year-over-year
dip was primarily due to a modest decline in clearing and
transaction fees along with lower or poor average daily volumes
across interest rates, foreign exchange, energy and metals asset
classes. These were marginally offset by stable average rate per
CME Group's average daily volume plummeted 9% year over year to
12.4 million contracts in the reported quarter. However, total
average rate per contract inched up 1% from the year-ago quarter to
81.2 cents. The volumes constituted mostly of lower-priced products
across asset-class that require higher volume discounts.
CME Group's clearing and transaction
fees decreased 6.4% year over year to $643.6 million,
while accounting for 81% of the total revenue. However, revenue
earned from market dataand
information services improved 2.7% year over year to
$110.8 million. Additionally, revenue from access and
communication fee surged 100% year over year to $22.6
million, while other revenues plunged
39.6% year over year to $18.9 million.
Meanwhile, total operating expenses climbed up 7.5% year over
year to $326.7 million. However, excluding non-recurring items,
operating expenses climbed 0.6% year over year to $305.7 million,
which is within management's projection. Operating income plunged
12.2% year over year to $469.2 million. Subsequently, operating
margin slipped to 59.0% from 63.8% in the year-ago quarter.
However, CME Group recorded a non-operating income of $41.5
million against non-operating expense of $25.2 million in the
year-ago quarter, primarily owing to a non-recurring income
As of June 30, 2012, CME Group had $1.3 billion of cash and
marketable securities, higher than $1.1 billion at 2011-end, while
long-term debt stood at $2.107 billion, in line with 2011-end
As of June 30, 2012, CME Group had total assets of $38.09
billion (down from $40.76 billion as of December 31, 2011) while
total shareholders' equity stood at $21.62 billion (up from $21.55
billion as of December 31, 2011). The company did not repurchase
shares during the reported quarter.
In April 2012, management had projected the effective tax rate
to be 41% for the remaining quarters of 2012. Previously, CME Group
had also disclosed its aim of maintaining expense growth below 5%
for 2012 and beyond.
On May 24, 2012, the board of CME Group declared a regular
dividend of $2.23 per share, which was paid on June 25, 2012, to
shareholders of record as on June 8, 2012.
In February 2012, CME Group hiked its regular quarterly dividend
by 59% to $2.23 per share from $1.40 per share, thereby increasing
its payout target to 50% from the prior 35%.
Yesterday, NASDAQ OMX Group Inc. ( NDAQ )
reported its second quarter operating earnings per share of 64
cents that handily surpassed the Zacks Consensus Estimate of 60
cents and the prior-year quarter's earnings of 62 cents a share.
Meanwhile, CME Group's another prime peer, NYSE Euronext
Inc. ( NYX ) is scheduled to release its results before
the market opens on August 3, 2012.
Currently, CME carries a Zacks Rank #3, which translates into a
short-term Hold rating, while the long-term recommendation remains
CME GROUP INC (CME): Free Stock Analysis Report
NASDAQ OMX GRP (NDAQ): Free Stock Analysis
NYSE EURONEXT (NYX): Free Stock Analysis Report
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