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CME Group Trades Above 200-Day SMA: Time to Hold CME Stock?

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Key Takeaways

  • CME's clearing and transaction fees remain its largest revenue driver, fueled by market volatility.
  • Rising electronic trading and crypto traction support growth.
  • Strong investments, cost efficiency, and a robust capital base aid expansion.

CME Group Inc. (CME - Free Report) has been trading above its 200-day simple moving average (SMA), signaling a short-term bullish trend. Its share price, as of Friday, was $271.39, down 6.7% from its 52-week high of $290.79.

The 200-day SMA is a technical indicator that shows the average closing price of a stock or asset over the last 200 trading days, helping to identify the long-term trend. This long-term moving average serves as a "line in the sand" for market direction, with the moving average line itself acting as a potential indicator of support or resistance.

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With a capitalization of $97.8 billion, CME Group is the largest futures exchange in the world in terms of trading volume and notional value traded. The average number of shares traded in the last three months was 2.2 million.

CME is an Outperformer

Shares of CME Group have gained 27.8% in the past year, outperforming its industry, the Finance sector and the Zacks S&P 500 composite’s growth of 16.2%, 17.2% and 15.8%, respectively.

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CME Shares are Affordable

CME Group is trading at a discount compared with the industry average. It presents a compelling investment opportunity with its attractive forward 12-month price-to-earnings ratio of 23.75x, lower than the industry average of 26.47x.

Shares of Intercontinental Exchange Inc. (ICE - Free Report) and Cboe Global Markets (CBOE - Free Report) are also trading at a discount to the industry average, while Nasdaq, Inc. (NDAQ - Free Report) shares are trading at a multiple higher than the industry average

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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 2024 estimates.

Optimistic Analyst Sentiment for CME

Four of the eleven analysts covering the stock have raised estimates for 2025, while three analysts have raised the same for 2026, over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved north 0.4% and 0.2% in the past 30 days, respectively.

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Target Price Reflects Potential Upside

Based on short-term price targets offered by 18 analysts, the Zacks average price target is $284.33 per share. The average indicates a potential 5.4% upside from the last closing price.

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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.

Nonetheless, CME remains exposed to concentration risk, as it continues to rely heavily on Interest Rate and Equity products for a large portion of its clearing and transaction fee revenues, despite diversification efforts. It also operates in a highly competitive environment. The derivatives exchange segment faces rising pressure from crypto trading platforms, while other segments contend with competition from electronic communication networks, single-dealer platforms and bank-owned trading venues.

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.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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