CME Group's (CME) Q1 Volumes Mark Highest Quarterly ADV

CME Group Inc. (NASDAQ:CME) has reported record volumes for the first quarter of 2018, marking the highest average daily volume in a quarter despite market volatility. ADV of record worth 22.2 million contracts per day improved 29% year over year. Of this, Options volume expanded 31% year over year to average 4.9 million contracts while electronic options surged 45% year over year and averaged at 3.1 million contracts. The company witnessed an increase in ADV in five of six product lines. However, shares of the company lost 0.05% in the last trading session.

Metals volume of 0.7 million contracts per day rose 39% whereas Energy volume of 2.8 million contracts climbed 10%. Interest rate volume of 11.9 million contracts jumped 30% and Foreign exchange volume ascended 23% to about 1.1 million. Agricultural volume of about 1.6 million contracts climbed 26% year over year. Only Equity index volume of 4.1 million soared 48%.

High volumes in the first quarter were driven by better numbers in each month. ADV for March grew 23% to 20.8 million contracts per day, led by an increase in ADV across five of six product lines.

Recently, securities exchanges, namely MarketAxess Holdings Ltd. (NASDAQ:MKTX) , CBOE Holdings Inc. (NASDAQ:CBOE) and Intercontinental Exchange, Inc. (NYSE:ICE) posted respective monthly volumes. While CBOE Global Markets’ March ADV of 8.5 million contracts declined about 18% year over year, Intercontinental Exchange’s volumes decreased 11.3% to 5.9 million contracts. MarketAxess has reported a trading volume of $152.3 billion for March 2018.

CME Group is scheduled to report first-quarter 2018 results before market open on Apr 26. The Zacks Consensus Estimate for the bottom line is pegged at $1.61 on revenues of $965.6 million, reflecting 31.9% and 3.9% respective year-over-year growth.

Our proven model shows that the company is likely to deliver a positive surprise with the right combination of a favorable Zacks Rank #3 (Hold) and an Earnings ESP of +1.56%.

Shares of CME Group have outperformed the industry year to date. While the stock has gained 11.4%, the industry has registered 5.6% growth.

CME Group’s improving volumes are cushioned by a solid operating leverage, helping it maintain an enormous market share. The company holds about 90% market share of the global futures trading and clearing services. Expansion of futures products in the emerging markets plus a rise in non-transaction related opportunities and OTC (over the counter) offerings should continue to contribute modestly to top-line growth in years ahead. Efforts to expand and cross-sell via strategic alliances, judicious acquisitions, product launches as well as widening global footprint should also drive growth.

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