CME Group (CME) to Report Q3 Earnings: What's in the Cards?

CME Group CME is slated to report third-quarter 2020 results on Oct 28, before market open. The company delivered an earnings surprise of 0.62% in the last reported quarter.

Factors to Consider

CME Group’s third-quarter revenues are likely to have benefited from clearing and transaction fees, market data and information services and other revenues, strong market position and varied derivative product lines.

Non-transaction related opportunities, OTC offerings and its options business are likely to have contributed to top-line growth.

The company boasts a premier position with about 90% market share of the global futures trading and clearing services. However, given the impact of the pandemic, the Zacks Consensus Estimate for clearing and transaction fees is pegged at $953 million, indicating a decrease of 18.3% from the year-ago reported figure.

In third-quarter 2020, average daily volumes (ADV) decreased 23% year over year to 15.6 million contracts per day. Energy volume of 1.8 million contracts decreased 25% from third-quarter 2019. Interest rate volume of 5.3 million contracts per day decreased 51% while Foreign exchange volumes dropped 3% to 0.8 million contracts per day. However, Metals volume of 0.8 million contracts per day increased 1%. Equity index volume of 5.4 million contracts per day increased 38%. Agricultural volume of 1.4 million contracts per day increased 4% from third-quarter 2019.

Higher compensation and benefits, technology expenses, professional fees and outside services, licensing and other fee agreements are likely to have increased expenses in the third quarter.

The Zacks Consensus Estimate for earnings per share is pegged at $1.41, indicating a decrease of nearly 25.8% from the year-ago quarter reported figure. The Zacks Consensus Estimate for revenues stands at $1.1 billion, indicating a downside of 14.5% from the year-ago quarter reported figure.

CME Group Inc. Price and EPS Surprise

  CME Group Inc. Price and EPS Surprise

CME Group Inc. price-eps-surprise | CME Group Inc. Quote

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for CME Group this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case as you can see below.

Earnings ESP: CME Group has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.41. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: CME Group currently carries a Zacks Rank of 4 (Sell).

Stocks to Consider

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

Aflac AFL has an Earnings ESP of +3.46% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ares Management L.P. ARES has an Earnings ESP of +1.42% and a Zacks Rank #2.

Franklin Resources BEN has an Earnings ESP of +1.33% and a Zacks Rank of 2.

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