Robust Volumes Boost CME's Earnings - Analyst Blog
CME Group Inc. ( CME ) reported second-quarter 2013 operating earnings per share of 93 cents. The results were modestly higher than the Zacks Consensus Estimate of 90 cents but significantly exceeded the year-ago quarter figure of 74 cents. Consequently, net income jumped 27.1% year over year to $311.2 million.
CME Group's total revenue edged up 2.5% year over year to $816.1 million and topped the Zacks Consensus Estimate of $806 million. The year-over-year growth was primarily due to a accretion in clearing and transaction fees due to incremental volumes within interest rate, foreign exchange and metal commodity products. However, a lower average rate per contract along with deteriorated revenues from market data and information services along with access and communication fees partially offset the upside.
CME Group's average daily volume jumped 16% year over year to 14.3 million contracts in the reported quarter, primarily driven by growth in Asian and Latin American markets. The radical improvement came across asset classes except agricultural products. However, total average rate per contract reduced 7.9% from the year-ago quarter to 74.8 cents. Nonetheless, the volumes constitute mostly of lower-priced products across asset-class that require higher volume discounts.
CME Group's clearing and transaction fees increased 7.6% year over year to $692.5 million, while accounting for about 85% of the total revenue. However, revenues from market data and information services decelerated 28.3% year over year to $79.4 million. Additionally, revenue from access and communication fee decreased 8.8% year over year to $20.6 million, while other revenue surged 24.9% year over year to $23.6 million.
Meanwhile, total operating expenses declined 5.6% year over year to $308.3 million. Operating income rose 8.2% year over year to $507.8 million, whereas operating margin rebounded to its historical highs of above 60% to 62.2% from 59.0% in the year-ago quarter.
Meanwhile, CME Group recorded a non-operating expense of $0.3 million against an income of $41.5 million in the year-ago quarter, primarily owing to higher interest and borrowing costs in the reported quarter and higher non-operating income in the year-ago quarter.
As of Jun 30, 2013, CME Group had $2.03 billion of cash and marketable securities, higher than $1.66 billion at 2012-end, while long-term debt stood at $1.36 billion, lower than the $2.11 billion at 2012-end.
As of Jun 31, 2013, CME Group had total assets of $46.88 billion (up from $38.86 billion as of Dec 31, 2012), while total equity stood at $21.85 billion (up from $21.42 billion as of Dec 31, 2012). The company did not repurchase shares during the reported quarter.
On May 23, 2013, the board of CME Group declared a regular dividend of 45 cents per share for the second quarter, which was paid on Jun 25, 2013 to shareholders of record Jun 10, 2013.
Apart from CME Group, MarketAxess Holdings Inc. ( MKTX ) currently carries a Zacks Rank #1 (Strong Buy) in the exchange industry. Other outperformers in the financial sector include Moody's Corp. ( MCO ) and CIT Group Inc. ( CIT ), both of which carry a Zacks Rank #2 (Buy).
CIT GROUP (CIT): Free Stock Analysis Report
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