Is CME Group Stock a Buy?
Market volatility has been extremely high this year, but that's not a bad thing for CME Group (NASDAQ: CME), which runs one of the leading derivatives exchanges in the country. It started out as the Chicago Mercantile Exchange, but has since grown through mergers with the Chicago Board of Trade, the New York Mercantile Exchange, and the Commodities Exchange.
The historic volatility of the first quarter, fueled by the coronavirus pandemic, led to record trading on CME's exchange, which means more transaction fees. The stock price is down about 8% year to date, but the company posted strong first-quarter earnings. Is CME Group a buy?
CME Group makes most of its income from transaction fees generated through trades on its exchange. In the first quarter, revenue from clearing and transaction fees was $1.3 billion, up 34% from the first quarter of the previous year. That accounted for most of the company's revenue, which was up 29% in the quarter to $1.5 billion. The market data business, which provides companies with real-time information, saw revenue climb slightly to $131 million from $130 million one year ago.
Source Fool.com
