Now trading at a price of $210.32, CME has moved -0.7% so far today.
CME returned gains of 25.0% last year, with its stock price reaching a high of $221.76 and a low of $166.55. Over the same period, the stock outperformed the S&P 500 index by 10.0%. More recently, the company's 50-day average price was $209.77. CME Group Inc., together with its subsidiaries, operates contract markets for the trading of futures and options on futures contracts worldwide. Based in Chicago, IL, the large-cap Finance company has 3,460 full time employees. CME has offered a 2.0% dividend yield over the last 12 months.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $4,309 | $4,868 | $4,884 | $4,690 | $5,019 | $5,237 |
| Interest Income (MM) | $170 | $178 | $166 | $728 | $474 | $721 |
| Operating Margins | 64.0% | 55.0% | 54.0% | 56.0% | 60.0% | 60.0% |
| Net Margins | 46.0% | 43.0% | 56.0% | 72.0% | 70.0% | 67.0% |
| Net Income (MM) | $1,964 | $2,116 | $2,722 | $3,374 | $3,490 | $3,490 |
| Depreciation & Amort. (MM) | $130 | $315 | $311 | $238 | $228 | $226 |
| Earnings Per Share | $5.71 | $5.91 | $5.87 | $7.29 | $7.4 | $8.2 |
| Diluted Shares (MM) | 344 | 358 | 359 | 359 | 359 | 360 |
| Free Cash Flow (MM) | $2,324 | $2,427 | $2,518 | $2,275 | $2,966 | $3,108 |
| Capital Expenditures (MM) | $117 | $246 | $198 | $127 | $90 | $84 |
| Net Current Assets (MM) | -$9,624 | -$9,488 | -$9,024 | -$7,619 | -$8,219 | -$7,113 |
| Long Term Debt (MM) | $3,827 | $3,743 | $9,051 | $8,086 | $8,784 | $8,767 |
| Net Debt / EBITDA | 14.61 | 13.07 | 31.95 | 56.87 | 43.57 | 35.48 |
CME has strong margins with a stable trend, growing revenues and decreasing reinvestment in the business, and positive EPS growth. However, the firm has a highly leveraged balance sheet. Finally, we note that CME has irregular cash flows.
CME's Valuation Is in Line With Its Sector Averages:
CME has a trailing twelve month P/E ratio of 25.0, compared to an average of 14.34 for the Finance sector. Based on its EPS guidance of $9.4, the company has a forward P/E ratio of 22.3. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 6.2%. On this basis, the company's PEG ratio is 4.02, which suggests that it is overpriced. Furthermore, CME is likely overvalued compared to the book value of its equity, since its P/B ratio of 2.68 is higher than the sector average of 1.57. The company's shares are currently trading 76.0% above their Graham number.
CME Has an Average Rating of Buy:
The 14 analysts following CME have set target prices ranging from $180.0 to $250.0 per share, for an average of $228.43 with a buy rating. As of April 2023, the company is trading -8.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.
CME has a very low short interest because 1.0% of the company's shares are sold short. Institutions own 88.5% of the company's shares, and the insider ownership rate stands at 0.46%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $7,005,673,633.
