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Will CME Group (CME) Pull a Surprise This Earnings Season?

CME Group Inc. CME is set to report first-quarter 2016 results on Apr 28, before the market opens. Last quarter, the company posted a positive earnings surprise of 2.22%. Let’s see how things are shaping up for this announcement.
 
Factors to Consider This Quarter
 
CME Group’s operating leverage drove growth in average daily volumes (ADV) in the first quarter. This should have a favorable impact on the upcoming earnings. Average daily volume was a record 16.9 million contracts per share, up 13% year over year.
 
Also, non-transaction related opportunities and the over-the-counter (OTC) offerings are likely to contribute modestly to top-line growth. 
 
In addition, the company anticipates increase in transaction fee revenues as well as market data revenues in the to-be-reported quarter. 
 
Further, electronic trading volume from outside the U.S. is anticipated to increase due to global expansion initiatives as well as a rise in the revenues from electronic options. 
 
However, both the top line and bottom line of CME Group are likely to suffer due to the soft derivative markets as well as the widening of spreads. Moreover, total expenses are estimated to have risen, thereby tapering margin. 
 
With respect to the surprise trend, CME Group delivered positive surprises in all of the last four quarters with an average beat of 3.18%. 
 
 
Earnings Whispers
 
Our proven model does not conclusively show that CME Group is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
 
Zacks ESP: CME Group has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.15.
 
Zacks Rank: CME Group carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, an ESP of 0.00% makes surprise prediction difficult. 
 
Stocks to Consider
 
Here are some companies from the finance sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
 
Arch Capital Group Ltd. ACGL has an Earnings ESP of +1.77% and a Zacks Rank #2. The company is slated to report first-quarter earnings on Apr 27.
 
Apartment Investment and Management Co. AIV has an Earnings ESP of +5.46% and a Zacks Rank #3. The company is set to report first-quarter earnings on Apr 28. 
 
CNA Financial Corp. CNA has an Earnings ESP of +13.33% and a Zacks Rank #3. The company is set to report first-quarter earnings on May 2.
 

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CNA FINL CORP (CNA): Free Stock Analysis Report
 
ARCH CAP GP LTD (ACGL): Free Stock Analysis Report
 
APARTMENT INVT (AIV): Free Stock Analysis Report
 
CME GROUP INC (CME): Free Stock Analysis Report
 
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