We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CME Outperforms Industry, Trades at a Discount: How to Play the Stock
Read MoreHide Full Article
Key Takeaways
{\"0\":\"CME\'s clearing and transaction fees remain its largest revenue driver, fueled by market volatility.\\r\\n\",\"1\":\"Rising electronic trading and crypto traction support growth.\\r\\n\",\"2\":\"Strong investments, cost efficiency, and a robust capital base aid expansion.\\r\\n\"}
Shares of CME Group Inc. (CME - Free Report) have gained 23.1% in the past year, outperforming the industry's growth of 5.8%, the Finance sector’s return of 17.2% and the Zacks S&P 500 composite’s appreciation of 17.6%.
With a market capitalization of $96.84 billion, the average volume of shares traded in the last three months was 2 million. CME has a solid track record of beating earnings estimates in three of the last four quarters, while missing in one, with an average of 1.62%.
Image Source: Zacks Investment Research
CME Shares are Undervalued
CME Group shares are trading at a discount to the Zacks Securities and Exchange industry. Its forward price-to-earnings of 23.44X is lower than the industry average of 24.19X.
Image Source: Zacks Investment Research
Shares of Intercontinental Exchange Inc. (ICE - Free Report) and Nasdaq, Inc. (NDAQ - Free Report) are also trading at a discount to the industry average, while Cboe Global Markets (CBOE - Free Report) shares are trading at a multiple higher than the industry average.
CME Trading Above 200-Day Moving Averages
Shares of CME Group closed at $268.73 on Thursday and are trading above the 200-day simple moving average (SMA) of $261.41, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
CME’s Growth Projection
The Zacks Consensus Estimate for CME Group’s 2024 earnings per share (EPS) indicates an 8.7% year-over-year increase. The consensus estimate for revenues is pegged at $6.53 billion, implying a year-over-year improvement of 6.5%.
The consensus estimate for 2026 EPS and revenues indicates an increase of 3.6% and 4.7%, respectively, from the corresponding 2025 estimates.
Optimistic Analyst Sentiment for CME
Two of the eleven analysts covering the stock have raised estimates for 2025 and 2026 over the past 60 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has both moved north 0.2% in the past 60 days.
Image Source: Zacks Investment Research
Target Price Reflects Potential Upside
Based on short-term price targets offered by 18 analysts, the Zacks average price target is $286.17 per share. The average indicates a potential 8.2% upside from the last closing price.
Image Source: Zacks Investment Research
Factors Impacting CME
CME Group demonstrates strong organic growth. Given that CME is an exchange, it naturally benefits from heightened market volatility, which fuels trading activity and, in turn, increases clearing and transaction fees. These fees continue to be the largest contributor to CME’s top line, and their sustained growth bodes well for future revenue expansion.
CME Group is also seeing rising electronic trading activity and increasing traction in crypto assets, driven by growing participation in the broader crypto economy. With Donald Trump’s second term ushering in a more crypto-friendly regulatory climate, CME is well-positioned to capitalize on these trends.
CME’s investments are delivering positive returns, and its ongoing focus on cost efficiency is helping to improve margins. A robust capital base supports initiatives to grow its market data business, broaden its product range and pursue strategic capital deployment.
Moreover, CME has consistently delivered strong financial performance, with free cash flow conversion exceeding 85% in recent quarters — a testament to its solid earnings quality.
End Notes
A strong global presence, a compelling product portfolio, a solid capital position, and a focus on over-the-counter clearing services poise CME well for growth. A crypto-friendly regulatory climate will add to the upside.
CME’s dividend history is impressive, too. It pays five dividends per year, with the fifth being variable and based on excess cash flow, making it an attractive pick for yield-seeking investors.
Image: Bigstock
CME Outperforms Industry, Trades at a Discount: How to Play the Stock
Key Takeaways
Shares of CME Group Inc. (CME - Free Report) have gained 23.1% in the past year, outperforming the industry's growth of 5.8%, the Finance sector’s return of 17.2% and the Zacks S&P 500 composite’s appreciation of 17.6%.
With a market capitalization of $96.84 billion, the average volume of shares traded in the last three months was 2 million. CME has a solid track record of beating earnings estimates in three of the last four quarters, while missing in one, with an average of 1.62%.
Image Source: Zacks Investment Research
CME Shares are Undervalued
CME Group shares are trading at a discount to the Zacks Securities and Exchange industry. Its forward price-to-earnings of 23.44X is lower than the industry average of 24.19X.
Image Source: Zacks Investment Research
Shares of Intercontinental Exchange Inc. (ICE - Free Report) and Nasdaq, Inc. (NDAQ - Free Report) are also trading at a discount to the industry average, while Cboe Global Markets (CBOE - Free Report) shares are trading at a multiple higher than the industry average.
CME Trading Above 200-Day Moving Averages
Shares of CME Group closed at $268.73 on Thursday and are trading above the 200-day simple moving average (SMA) of $261.41, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
CME’s Growth Projection
The Zacks Consensus Estimate for CME Group’s 2024 earnings per share (EPS) indicates an 8.7% year-over-year increase. The consensus estimate for revenues is pegged at $6.53 billion, implying a year-over-year improvement of 6.5%.
The consensus estimate for 2026 EPS and revenues indicates an increase of 3.6% and 4.7%, respectively, from the corresponding 2025 estimates.
Optimistic Analyst Sentiment for CME
Two of the eleven analysts covering the stock have raised estimates for 2025 and 2026 over the past 60 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has both moved north 0.2% in the past 60 days.
Image Source: Zacks Investment Research
Target Price Reflects Potential Upside
Based on short-term price targets offered by 18 analysts, the Zacks average price target is $286.17 per share. The average indicates a potential 8.2% upside from the last closing price.
Image Source: Zacks Investment Research
Factors Impacting CME
CME Group demonstrates strong organic growth. Given that CME is an exchange, it naturally benefits from heightened market volatility, which fuels trading activity and, in turn, increases clearing and transaction fees. These fees continue to be the largest contributor to CME’s top line, and their sustained growth bodes well for future revenue expansion.
CME Group is also seeing rising electronic trading activity and increasing traction in crypto assets, driven by growing participation in the broader crypto economy. With Donald Trump’s second term ushering in a more crypto-friendly regulatory climate, CME is well-positioned to capitalize on these trends.
CME’s investments are delivering positive returns, and its ongoing focus on cost efficiency is helping to improve margins. A robust capital base supports initiatives to grow its market data business, broaden its product range and pursue strategic capital deployment.
Moreover, CME has consistently delivered strong financial performance, with free cash flow conversion exceeding 85% in recent quarters — a testament to its solid earnings quality.
End Notes
A strong global presence, a compelling product portfolio, a solid capital position, and a focus on over-the-counter clearing services poise CME well for growth. A crypto-friendly regulatory climate will add to the upside.
CME’s dividend history is impressive, too. It pays five dividends per year, with the fifth being variable and based on excess cash flow, making it an attractive pick for yield-seeking investors.
Given its solid growth projection, attractive valuation, and positive analyst statement, this Zacks Rank #2 (Buy) stock appears to be a compelling investment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.