CME Group Q4 Profit Plunges 78%; Adjusted Net and Revenue In-Line with Estimates (CME)

CME Group Q4 Profit Plunges 78%; Adjusted Net and Revenue In-Line with Estimates (CME)


After the bell on Tuesday, exchange operator CME Group Inc. (CME) saw its profit plunge, in-line with Wall Street estimates, as trading sagged and the Federal Reserve continued its low interest rate policy.

The Chicago-based company reported its fourth quarter net income of $167 million, or 50 cents per share, down 78% from $745.9 million, or $2.25 per share, earned in the same period a year earlier. Adjusting for one-time items, earnings for the quarter were 63 cents per share, which was in-line with analyst view according to Thomson Reuters.

The company was negatively impacted as average daily trading volume was down 13% in the quarter from the same period a year ago. This led to a decrease in clearing and transaction fee revenues, which declined 9% to $544.6 million in the quarter.

Total revenue in the quarter was down 10% from $736.5 million to $660.0 million. Analysts had a consensus view that CME would see revenue at $660.2 million.

For fiscal 2012, CME’s net income declined to $896.3 million, or $2.70 per share, from $1.81 billion, or $5.43 per share, in 2011. Total revenue in 2012 was down 11% to $2.91 billion from $3.28 billion in the previous year. On average, analysts were expecting the company to post a full year EPS of $3.03 on revenues of $2.91 billion.

Terry Duffy, Executive Chairman and President of CME Group said, “Despite facing a difficult environment with low volatility in 2012, we made significant progress in advancing our global strategy while preparing for the changing regulatory landscape. We will further expand our footprint in Europe with the proposed launch of a new London-based exchange, and we continued to strengthen our position in Asia.”

CME Group shares were down $1.18, or -1.99%, during pre-market trading on Wednesday. The stock is up +8.22% over the past year.

The Bottom Line
Shares of CME Group (CME) have a dividend yield of 3.04% based on last night’s closing price of $59.18 and the company’s annualized dividend of $1.80 per share.

CME Group Inc (CME) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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