Additionally, its average rate per contract also saw a slight dip in the year. The clearing & transaction fees for CME suffered in 2020, unlike its peer NASDAQ, because of lower contract volumes on a year-on-year basis driven by lower ADV in interest rate contracts. The growth was restricted due to a slight drop in the clearing and transaction fees, which constitutes more than 80% of its revenues.
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The company reported $4.9 billion in revenues for the full year 2020, which is marginally ahead of the 2019 figure. The opportunity we see is an improved trajectory for CME Group’s revenues over the subsequent quarters. Not quite, despite the recent gains, Trefis estimates CME Group’s valuation to be around $212 per share – slightly below the current market price, based on a key opportunity and one risk factor. Second, the increase in retail investor participation.
There were two main reasons behind the rise in ADV on a sequential basis: First, the approval of the $1.9 trillion stimulus package. This has led to positive investor interest in the stock. The exchange has surpassed the consensus estimates over the last two quarters, mainly driven by strong ADV (average daily volume) growth on a sequential basis. What To Expect From CME Group Stock In Q2?ĬME Group stock (NASDAQ: CME), the world’s largest financial derivatives exchange, gained roughly 18% – increasing from about $182 at the beginning of 2021 to around $216 currently, outperforming the S&P500, which grew 12% over the same period. This coupled with a P/E multiple of just below 33x, will lead to the valuation of $216.
It will likely result in an EPS of around $6.61 in FY2021. Despite stagnant revenues, the company’s profitability numbers are likely to improve in FY2021 – net income is likely to grow 14% y-o-y to $2.4 billion. While the non-trading revenues are likely to see some growth in the year, the overall CME Group revenues are expected to remain around $4.9 billion – the same level as the previous year’s figure. Moving forward, we expect the company to report stagnant growth in clearing and transaction fees. However, ADV saw some recovery in the second quarter on a year-on-year basis. The same trend continued in the first quarter of 2021, with total ADV decreasing by 19% y-o-y. While all CME’s peers benefited from higher market volatility in 2020, leading to growth in clearing and transaction fees, CME suffered due to lower ADV in interest rate contracts and a decline in average rate per contract. This was due to some negative growth in clearing and transaction fees. The company reported $4.9 billion in revenues for 2020 – marginally ahead of the 2019 figure. On the flip side, the company reported a 1% y-o-y growth in the net income to $511 million, driven by some decrease in the operating expenses. Further, the average rate per contract also witnessed a slight drop due to a shift in the product mix. This took away the positive effect of a 25% increase in the interest rates ADV. The clearing and transaction fees suffered due to a 12% and 24% y-o-y drop in the equity indexes and metals average daily volume (ADV), respectively. This could mainly be attributed to a slight drop in clearing and transaction fees, partially offset by an 8% growth in market data and information services. It reported net revenues of $1.18 billion, which is marginally less than the year-ago period. The stock has lost approximately 11% since its second-quarter 2021 results in July, despite outperforming the consensus estimates for revenues and earnings. Institutional Distribution IntelligenceĬME Group stock (NASDAQ: CME) has gained a meager 4% YTD, and at its current price of $189 per share, it is trading 13% below its fair value of $216 – Trefis’ estimate for CME Group’s valuation.Non-Traditional Exchanges & New Markets.Directors’ and Officers’ Questionnaires.
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