CME Group Earnings Expected to Grow: Should You Buy?

CME Group (CME) is set to announce its earnings results for the quarter ending in September 2024. Analysts anticipate that the company will show a significant rise in earnings compared to the same period last year, primarily driven by higher revenues. This upcoming earnings report is vital for CME, as the actual results will influence its stock price in the near future.

Investors should look forward to the earnings report, which is scheduled for October 23, 2024. If the company exceeds the expectations outlined by analysts, it could result in a positive movement in CME's stock price. Conversely, if the results fall short of these projections, a decline in stock value might occur.

Ultimately, the reactions of investors and stock movements will hinge on the discussion about business conditions during the earnings call, but it's also crucial to evaluate the likelihood of a positive surprise in earnings per share (EPS).

Zacks Consensus Estimate

CME Group, the parent company of the Chicago Board of Trade and other exchanges, is projected to report an earnings figure of $2.57 per share. This represents an impressive increase of 14.2% from the previous year. In terms of revenues, CME is expected to generate $1.53 billion, marking a 14.3% growth compared to the same quarter last year.

Estimate Revisions Trend

In the 30 days leading up to the earnings report, the consensus EPS estimate has been revised upward by 2.65%. This change reflects the way analysts have reassessed their initial predictions, showcasing a generally positive outlook for CME's financial performance.

However, it's essential to note that an aggregate change doesn’t imply that all analysts revised their estimates in the same direction or by the same amount.

Earnings Whisper

The revisions in estimates prior to the earnings announcement can signal the business conditions for the upcoming period. The Zacks Earnings ESP (Expected Surprise Prediction) model plays a significant role in this analysis.

This model compares the Most Accurate Estimate with the Zacks Consensus Estimate for the quarter. It considers any recent updates from analysts, which can indicate a more precise prediction of CME's performance compared to earlier estimates.

A positive Earnings ESP suggests a probable earnings beat, particularly when paired with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold). Data shows that stocks within this combination tend to surpass expectations around 70% of the time. In contrast, a negative Earnings ESP does not guarantee an earnings miss but signals uncertainty regarding a positive surprise.

How Have the Numbers Shaped Up for CME?

For CME Group, the Most Accurate Estimate is above the Zacks Consensus Estimate, indicating that analysts have become increasingly optimistic about the company’s earnings potential. Currently, CME enjoys an Earnings ESP of +3.02%.

Additionally, the stock holds a Zacks Rank of #2, further suggesting a higher likelihood of outperforming earnings expectations.

Does Earnings Surprise History Hold Any Clue?

When analysts make their future earnings predictions, they often consider how well a company has historically matched its consensus estimates. CME's past performance shows it exceeded expectations last quarter, with an actual earnings report of $2.56 per share against predictions of $2.51, leading to a surprise of +1.99%. Throughout the last four quarters, CME has consistently beaten consensus EPS estimates.

Bottom Line

While a positive or negative earnings report can influence a stock’s price, it's essential to recognize that other factors may also play a crucial role in driving stock performance. For instance, stocks might decline even after reporting strong earnings if other aspects disappoint investors. Conversely, unexpected positive catalysts can lift stocks even if they don't meet earnings expectations.

Keeping an eye on stocks that are poised to surpass earnings estimates can enhance investment success. Therefore, assessing a company's Earnings ESP and Zacks Rank before the quarterly release is important for sound investment decisions. Utilize the Earnings ESP Filter to find the best stocks to consider for buying or selling before they announce their results.

In summary, CME Group appears to be a strong candidate for an earnings beat. However, investors should also weigh other factors before deciding to invest in this stock as its earnings release approaches. Stay informed about upcoming earnings announcements to make educated investment choices.

CME, Earnings, Investing