Peek Into Jul 28 Securities Exchanges Q2 Earnings: CME, MKTX

The second-quarter earnings season is in full swing this week. So far, we have results from 126 S&P 500 members (as of Jul 22) that combined account for 32.7% of the index’s total market capitalization as per the Earnings Trends report. Revenues are up 2.6% while earnings are down 1.1%. However, the beat ratio is 70.6% for the bottom line and 55.6% for the top line.

Securities Exchange is part of the broader Finance sector. So far, 35.6% of the total Finance sector has come up with second-quarter results. The sector is expected to post earnings decline of 0.4% and revenue decline of 0.5%.

Let’s see what factors might have influenced its performance in the second quarter.

Earnings of the players in the sector should benefit from the expansion of futures products into emerging markets and OTC offerings. Increased electronic trading volume will also add scale to the business.

Product diversity as well as innovative risk management provided by the players will continue to attract customers and drive revenues.

Nevertheless, a volatile interest rate environment, fluctuating currencies, and limited credit availability are expected to suppress customer demand, consequently hampering top-line growth. Also, intense competition might affect volumes of the players in the sector.

As many as 189 companies will release results from Jul 25–29.

Let’s find out what’s in store for two major security exchange stocks that will report second-quarter earnings results on Jul 28:

CME Group Inc. (NASDAQ:CME) offers the widest range of benchmark products covering all major asset classes, specifically futures products and options on futures. Last quarter, the company’s earnings were in line with the Zacks Consensus Estimate. It has an Earnings ESP of 0.00% as the Most Accurate Estimate of $1.11 is the same as the Zacks Consensus Estimate.
The company carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP but a 0.00% ESP makes surprise prediction difficult.

CME Group is likely to witness average daily volume growth in the to-be-reported quarter, owing to improved operating leverage. Also, Globex volume, which comprises the majority of the exchange’s trading volume, is expected to grow in the second quarter.

Further, the company is likely to experience top-line growth on the back of expansion in futures products in emerging markets, non-transaction related opportunities and over-the-counter offerings.

With respect to surprise trend, the company beat estimates in three of the last four quarters with an average positive earnings surprise of 2.39%. (Read more: Can CME Group Pull a Surprise this Earnings Season?)

CME GROUP INC Price and EPS Surprise

MarketAxess Holdings Inc. (NASDAQ:MKTX) , based in New York, is a leading multi-dealer trading platform that offers institutional investors access to global liquidity in products like U.S. high-grade corporate bonds, emerging markets and high-yield bonds.

Last quarter, the company’s earnings missed the Zacks Consensus Estimate by 3.75%. It has an Earnings ESP of 0.00% as the Most Accurate Estimate of 85 cents is the same as the Zacks Consensus Estimate. The company sports a Zacks Rank #1 (Strong Buy).

The company missed estimates in two of the past four quarters and delivered a positive surprise in only one, resulting in an average earnings miss of 1.34%.
MARKETAXESS HLD Price and EPS Surprise

Stay tuned! Check back on our full write-up on earnings releases of these stocks.

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