Analyst Note
| Michael Wong, CFA, CPA |Wide-moat CME Group reported sequentially improved revenue in the fourth quarter, and we believe revenue may have stabilized after a fairly volatile year. The company reported net income to common shareholders of $424 million, or $1.18 per diluted share, on $1.1 billion of revenue during the fourth quarter. Revenue increased 1.6% from the previous quarter, but was down 3.5% year over year. CME Group is more exposed to asset classes that are cyclically depressed, including interest rates and energy. For the full year, revenue increased less than 1% to $4.88 billion, as strong activity in the first quarter was largely offset by weaker activity in the remainder of the year, and earnings per diluted share declined less than 1% to $5.87. We don’t anticipate making a material change to our $153 per share fair value estimate for CME Group.