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CME Group Inc Class A CME

Morningstar Rating
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Stock XNAS Rating as of
$200.54 +1.16 (0.58%)
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As of Delayed Price Closed
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Company Report

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CME Group Earnings: Strong Trading Volume Across All Asset Classes Drives Double-Digit EPS Growth

Michael Miller

Wide-moat-rated CME Group reported strong second-quarter earnings as the company enjoyed high trading volume growth across all asset classes. Revenue increased 12.7% from last year and 3% from last quarter to $1.53 billion. Meanwhile, diluted earnings per share increased 13% from last year to $2.42, though the company did benefit from one extra trading day in the quarter. As we incorporate these results, we do not expect to materially alter our $225 fair value estimate. We see the company as modestly undervalued at the current price, though we note that once interest rates begin to decline the firm will face headwinds on earnings growth.

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Price vs Fair Value

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CME is trading at a 531% premium.
Price
$200.54
Fair Value
$746.00
Uncertainty
Medium
1-Star Price
$165.81
5-Star Price
$628.90
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
$199.38
Day Range
$198.85–201.49
52-Week Range
$190.70–223.80
Bid/Ask
$199.95 / $201.10
Market Cap
$72.21 Bil
Volume/Avg
1.3 Mil / 2.2 Mil

Key Statistics

Price/Earnings (Normalized)
21.17
Price/Sales
12.37
Dividend Yield (Trailing)
4.31%
Dividend Yield (Forward)
4.31%
Total Yield
4.34%

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 Value
Total Number of Employees
3,565
Website
https://www.cmegroup.com

Competitors

Valuation

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Metric
CME
ICE
NDAQ
Price/Earnings (Normalized)
 21.1726.1624.28
Price/Book Value
 2.603.263.56
Price/Sales
 12.378.285.64
Price/Cash Flow
 20.0220.0621.26
Price/Earnings
CME
ICE
NDAQ

Financial Strength

Metric
CME
ICE
NDAQ
Quick Ratio
 0.020.060.20
Current Ratio
 1.011.010.99
Interest Coverage
 26.784.154.54
Quick Ratio
CME
ICE
NDAQ

Profitability

Metric
CME
ICE
NDAQ
Return on Assets (Normalized)
 2.40%2.34%5.48%
Return on Equity (Normalized)
 12.34%13.01%18.04%
Return on Invested Capital (Normalized)
 11.37%8.16%9.28%
Return on Assets
CME
ICE
NDAQ
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