Why CME Group Stock Was a Winner on Wednesday

CME Group (CME 3.74%) reported some good news Wednesday morning, and investors rewarded the company by trading its stock up on the day. Following the release of its fourth-quarter results before the market opened, the shares zoomed up to close nearly 4% higher. That outpaced the slightly less than 1% gain of the S&P 500 index.

Double beats for the fourth quarter

For the period, CME, which owns and operates a collection of derivatives markets, posted revenue of $1.44 billion. This was up from the $1.21 billion it earned in Q4 2022. On the bottom line, CME netted a non-GAAP (adjusted) profit of nearly $865 million ($2.37 per share), which was substantially higher than the $689 million of the year-ago period.

Both headline figures topped analysts’ consensus estimates. On average, pundits tracking CME were modeling for adjusted net income of $2.28 per share and revenue of $1.42 billion.

Higher trading volumes were the major drivers of those increases on the top and bottom lines. In its earnings release, CME said that its average daily trading volume hit a new annual record in 2023. Specifically in the fourth quarter, the company benefited from a sharp rise in U.S. Treasury bond futures activity.

Sharing the wealth

CME also didn’t hesitate to point out that it is returning some of those enhanced profits to shareholders. Last week, it pulled the lever on a dividend raise, hiking its quarterly payout to $1.15 per share. The company also habitually pays an annual variable dividend; this, declared in December for 2023, was $5.25 per share.

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