Will CME Group (CME) Miss Q2 Earnings on Lower Volumes? - Analyst Blog

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Global futures exchange CME Group Inc. ( CME ) is scheduled to release second-quarter 2014 financial results before the opening bell on Jul 31.

In the last reported quarter, the company posted break-even results, although the four-quarter trailing average beat is pegged at 0.5%. Let us see how things are shaping up for this announcement.

Factors at Play


CME Group's average daily volumes fell 12% year over year in the second quarter due to lower rate per contracts and sluggish volatility. Trading volumes account for a substantial portion of transaction fees revenues, a major revenue driver for the company.

Alongside, higher operating and interest expenses as well as capital expenditure are likely to adversely affect operating margins, which has been below the historical average of +60% over the last several quarters.

Moreover, risks from OTC markets and lack of any significant growth catalyst amid stiff competition and stringent regulations pose operational and financial risks. Alongside, a weak capital market and limited fund resources have compelled CME Group to delay its current share repurchase program, although dividend payouts continue to retain investors' confidence.

Earnings Whispers

Our proven model shows that CME Group is unlikely to beat earnings as it lacks the required combination of two key components.

Zacks ESP : CME Group has a negative Zacks ESP. That is because the Earnings ESP , which represents the difference between the Most Accurate estimate of 79 cents per share and the Zacks Consensus Estimate of 80 cents, is -1.25%.

Zacks Rank : CME Group has a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into an earnings announcement. 

Other Stocks to Consider

Here are some other financial companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter: 

Qiwi Plc ( QIWI ) has Earnings ESP of +4.76% and a Zacks Rank #1 (Strong Buy).

United Insurance Holdings Corp. ( UIHC ) has Earnings ESP of +2.33% and a Zacks Rank #1.

Lazard Ltd. ( LAZ ) has Earnings ESP of +1.59% and a Zacks Rank #2 (Buy).


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LAZARD LTD (LAZ): Free Stock Analysis Report

QIWI PLC-ADR (QIWI): Free Stock Analysis Report

UTD INSURANCE (UIHC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CME , LAZ , QIWI , UIHC

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