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CME Group Inc Class A CME

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Stock XNAS Rating as of
$212.54 −0.05 (0.02%)
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As of Delayed Price Closed
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Company Report

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CME Group Earnings: Interest Rate and Inflation Uncertainty Keep Interest Rate Futures Volume High

Michael Miller

Wide-moat-rated CME Group reported solid earnings that were in line with our expectations as the company benefits from strong futures trading volume, particularly for the firm’s energy and commodity futures. Revenue increased 3.2% from last year to $1.49 billion, while earnings per share fell to $2.35 from $2.43. The drop in earnings per share was entirely due to a decrease in nonoperating investment income. This was a stronger quarter than the year-over-year comparisons imply. The first quarter of 2023 benefited from the regional banking crisis, which caused a sharp temporary spike in interest rate futures trading. As we incorporate these results, we do not plan to materially alter our $225 fair value estimate for CME, and we see the shares as only slightly undervalued.

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Price vs Fair Value

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CME is trading at a 4% discount.
Price
$215.48
Fair Value
$394.00
Uncertainty
Medium
1-Star Price
$278.83
5-Star Price
$735.50
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

CME has assembled a diverse set of derivative products in interest rates, equities, commodities, metals, and foreign currency. Weakness in one product is often offset by strength in another.

Bears

Unlike its peers, CME is still mostly a transactional business, leaving its results more exposed to market forces.

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News

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Trading Information

Previous Close Price
$212.59
Day Range
$211.19–216.52
52-Week Range
$175.73–223.80
Bid/Ask
$206.01 / $213.82
Market Cap
$76.52 Bil
Volume/Avg
2.0 Mil / 1.7 Mil

Key Statistics

Price/Earnings (Normalized)
22.76
Price/Sales
13.59
Dividend Yield (Trailing)
4.05%
Dividend Yield (Forward)
4.05%
Total Yield
4.05%

Company Profile

Based in Chicago, CME Group operates exchanges giving investors, suppliers, and businesses the ability to trade futures and derivatives based on interest rates, equity indexes, foreign currencies, energy, metals, and commodities. The CME was founded in 1898 and in 2002 completed its initial public offering. Since then, CME Group has consolidated parts of the industry by merging with crosstown rival, CBOT Holdings in 2007 before acquiring Nymex Holdings in 2008 and NEX in 2018. In addition, the company has a 27% stake in S&P Dow Jones Indices, making the Chicago Mercantile Exchange the exclusive venue to trade and clear S&P futures contracts. Through CME’s acquisition of NEX in 2018, it has also expanded into cash foreign exchange, fixed income trading, and collateral optimization.
Sector
Financial Services
Industry
Financial Data & Stock Exchanges
Stock Style Box
Large Core
Total Number of Employees
3,565
Website
https://www.cmegroup.com

Competitors

Valuation

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Metric
CME
ICE
NDAQ
Price/Earnings (Normalized)
 22.7623.4121.30
Price/Book Value
 2.822.943.21
Price/Sales
 13.597.525.14
Price/Cash Flow
 21.5318.9518.50
Price/Earnings
CME
ICE
NDAQ

Financial Strength

Metric
CME
ICE
NDAQ
Quick Ratio
 0.040.050.17
Current Ratio
 1.021.001.01
Interest Coverage
 27.064.195.73
Quick Ratio
CME
ICE
NDAQ

Profitability

Metric
CME
ICE
NDAQ
Return on Assets (Normalized)
 2.25%2.10%5.78%
Return on Equity (Normalized)
 12.26%13.14%19.99%
Return on Invested Capital (Normalized)
 11.30%8.05%9.86%
Return on Assets
CME
ICE
NDAQ
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