On Tuesday, \shares of
CME Group Inc.
) reached a 52-week high of $65.49. The momentum was driven by
improved volumes and fair liquidity, led by a reduction in debt
during the first quarter of 2013. CME Group delivered positive
earnings surprises in the last 4 quarters with an average beat of
Yesterday's closing price represents a strong one-year return
of about 24.7% and a year-to-date return of about 30.7%. The
Nasdaq index jumped 23% and 17.9% respectively during the same
period. Average volume of shares traded over the last three
months stands at approximately 1673.7K.
The share price of this Zacks Rank #3 (Hold) stock has been
experiencing a rising trend ever since the company reported its
first-quarter 2013 earnings on May 2. CME Group reported
operating earnings per share of 73 cents, at par with the Zacks
Consensus Estimate. However, results lagged the year-ago
quarter's earnings of 80 cents a share.
The year-over-year downside reflected a 7.2% decline in
revenues driven by deterioration in clearing and transaction fees
along with lower revenue from market data and information
services. These were marginally offset by a 1% increase in
average daily volumes.
Nevertheless, CME Group has been enforcing strict expense
control as reflected by a 3.2% decline in total operating
expenses in the first quarter of 2013, while non-operating
expenses remained at par with the year-ago figure. Total expenses
are further projected to be below 5% for 2013.
Overall, despite relatively weak results, the company has been
stacking adequate cash, which not only supports debt reduction
but also paves the way for effective capital deployment. This
should further confidence among investors.
Meanwhile, valuation looks reasonable for CME Group. The
shares are trading at a 7% premium to the peer group average on a
forward price-to-earnings basis, although on a price-to-book
basis the shares are trading at a 66.1% discount to the peer
group average. Return on equity and return on assets are 4.6% and
2.6%, respectively, below the peer group average. However, the
estimated long-term growth is pegged at 12.6%, higher than the
peer group average of 12.0%.
Other stocks in the financial sector that warrant a look
CBOE Holdings Inc.
XL Group Plc
Mitsubishi UFJ Financial Group Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
CBOE HOLDINGS (CBOE): Free Stock Analysis
CME GROUP INC (CME): Free Stock Analysis
MITSUBISHI-UFJ (MTU): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
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