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CME Group Posts Mixed August ADV Across 6 Product Lines

Zacks Equity Research
Updated

CME Group Inc.  CME reported volumes for August 2018, marking growth across five product lines. ADV of 15.9 million contracts per day remained flat year over year but improved 18% sequentially. Of this, Options volume average totaled 3.2 million contracts.

Shares of CME Group have outperformed the industry year to date. While the stock has rallied 18%, the industry has registered 10.3% growth.



Metals volume of 0.6 million contracts per day inched up 1% whereas Interest rate volume of 8.6% million contracts grew 11% and Foreign exchange volume ascended 8% to about 0.8 million. Agricultural volume of about 1.4 million contracts climbed 3% year over year. Equity index volume of 2.4 million decreased 12% while Energy volume of 1.9 million contracts plunged 30% year over year.

Recently, securities exchange MarketAxess Holdings Ltd. MKTX reported a trading volume of $124.4 billion for August comprising $66.1 billion in U.S. high-grade volume, $53.3 billion in other credit volume and $5 billion in liquid products volume. Nasdaq Inc. NDAQ too posted a 10.5% increase in options volume, registering 154.6 million contracts.

Improved volumes across trading line should continue to fuel growth for CME Group.  Fundamental growth remains a huge driver for the company’s improving operating leverage. Increasing electronic trading volume adds scalability and hence leverage to the operating model. Expansion of futures products in the emerging markets plus a rise in non-transaction related opportunities as well as OTC (over the counter) offerings should continue to contribute modestly to top-line growth in the years ahead. Efforts to expand and cross-sell via strategic alliances, judicious acquisitions, product launches as well as a widening global footprint should also drive growth.

CME Group carries a Zacks Rank #4 (Sell).

Stock to Consider

A better-ranked stock from the finance sector is Berkshire Hathaway Inc. BRK.B, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Berkshire Hathaway engages in insurance, freight rail transportation and utility businesses. It came up with a 22.91% beat in the previously reported quarter.

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