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CME Group Inc Class A CME

Morningstar Rating
$206.48 +0.25 (0.12%)
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Company Report

CME Has Benefited From Higher Interest Rates as Volatility Returns to Its Markets

CME Group has enjoyed favorable market conditions in 2022 and 2023 as volatility across multiple asset classes drove increased trading volume, leading to strong revenue growth. Prior to 2022, the most significant headwind for the company had been the impact that low short-term interest rates had on its interest rate futures, which are its largest source of revenue. When interest rates are expected to stay low there is less need for interest rate hedging and less incentive for speculation, creating a drag on CME's trading volume. With interest rates now well above the 0% rate we saw during much of the past decade, the drag has been removed, benefiting the company's growth. That said, this was a one-time benefit, and we expect CME's revenue growth to return to the low to midsingle digits going forward, particularly as 2023 featured unusually large price increases from CME.

Price vs Fair Value

CME is trading at a 8% discount.
Price
$206.48
Fair Value
$871.00
Uncertainty
Medium
1-Star Price
$687.48
5-Star Price
$984.60
Economic Moat
Xwgk
Capital Allocation
Hmclnqcgxw

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

Trading Information

Previous Close Price
$206.23
Day Range
$206.15208.75
52-Week Range
$175.73223.80
Bid/Ask
$204.11 / $215.00
Market Cap
$74.34 Bil
Volume/Avg
4 / 1.7 Mil

Key Statistics

Price/Earnings (Normalized)
22.10
Price/Sales
13.30
Dividend Yield (Trailing)
4.17%
Dividend Yield (Forward)
4.17%
Total Yield
4.17%

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

Competitors

Valuation

Metric
CME
ICE
NDAQ
Price/Earnings (Normalized)
22.1023.0721.21
Price/Book Value
2.772.893.19
Price/Sales
13.307.415.03
Price/Cash Flow
20.9118.6818.42
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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