It's been a great afternoon session for CME investors, who saw their shares rise 1.3% to a price of $238.99 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
CME's Valuation Is in Line With Its Sector Averages:
CME Group Inc., together with its subsidiaries, operates contract markets for the trading of futures and options on futures contracts worldwide. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 20.04 and an average price to book (P/B) ratio of 1.86. In contrast, CME has a trailing 12 month P/E ratio of 25.1 and a P/B ratio of 3.05.
CME has moved 11.8% over the last year compared to 28.8% for the S&P 500 — a difference of -17.0%. CME has a 52 week high of $249.02 and a 52 week low of $190.7.
Generally Positive Cash Flows but an Average Current Ratio:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $4,309 | $4,868 | $4,884 | $4,690 | $5,019 | $5,579 |
| Interest Income (M) | $158 | $178 | $166 | $167 | $163 | $159 |
| Operating Margins | 61% | 53% | 54% | 56% | 60% | 62% |
| Net Margins | 46% | 43% | 43% | 56% | 54% | 57% |
| Net Income (M) | $1,964 | $2,116 | $2,105 | $2,636 | $2,691 | $3,226 |
| Depreciation & Amort. (M) | $119 | $159 | $153 | $148 | $135 | $126 |
| Diluted Shares (M) | 344 | 358 | 359 | 359 | 359 | 360 |
| Earnings Per Share | $5.71 | $5.91 | $5.87 | $7.29 | $7.4 | $8.86 |
| EPS Growth | n/a | 3.5% | -0.68% | 24.19% | 1.51% | 19.73% |
| Avg. Price | $142.94 | $168.39 | $159.74 | $191.53 | $210.81 | $239.11 |
| P/E Ratio | 24.95 | 28.4 | 27.17 | 26.24 | 28.45 | 26.96 |
| Free Cash Flow (M) | $2,324 | $2,427 | $2,518 | $2,275 | $2,966 | $3,377 |
| CAPEX (M) | $117 | $246 | $198 | $127 | $90 | $76 |
| Current Ratio | 1.01 | 1.03 | 1.01 | 1.01 | 1.01 | 1.02 |
CME has strong operating margins with a stable trend, generally positive cash flows, and positive EPS growth. Furthermore, CME has growing revenues and decreasing reinvestment in the business and just enough current assets to cover current liabilities, as shown by its current ratio of 1.02.
