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CME Outperforms Industry, Trades at a Discount: Time to Hold?
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Key Takeaways
CME gains from market volatility, with clearing and transaction fees remaining its largest revenue driver.
CME is seeing higher crypto trading activity, aided by growing participation in the crypto economy.
CME's strong cash flow supports dividends, and investments in data, products, and clearing services.
Shares of CME Group Inc. (CME - Free Report) have gained 15.5% in the past year, outperforming the industry's growth of 8.1%.
CME Group has outperformed its peers, including Intercontinental Exchange Inc. (ICE - Free Report) , S&P Global Inc. (SPGI - Free Report) and OTC Markets Group Inc. (OTCM - Free Report) . Shares of ICE and SPGI have gained 7.5% and 4.1%, respectively, while OTCM stock has lost 4.4% in the past year.
Image Source: Zacks Investment Research
With a market capitalization of $98.71 billion, the average volume of shares traded in the last three months was 1.9 million. CME has a solid track record of beating earnings estimates in each of the last four quarters, with an average of 1.82%.
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 23.61X is lower than the industry average of 23.83X.
Image Source: Zacks Investment Research
CME Trading Above 50-Day and 200-Day Moving Averages
Shares of CME Group closed at $273.74 on Wednesday and are trading above the 50-day and 200-day simple moving averages (SMA) of $271.90 and $270.71, respectively, 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 2025 earnings per share (EPS) indicates an 8.4% 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 4.3% and 4.9%, respectively, from the corresponding 2025 estimates.
Optimistic Analyst Sentiment for CME
Two of the 10 analysts covering the stock have raised estimates for 2025, and two 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 0.08% and 0.3%, respectively, in the past 30 days.
Target Price Reflects Potential Upside
Based on short-term price targets offered by 16 analysts, the Zacks average price target is $291.38 per share. The average indicates a potential 6.4% 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: Time to Hold?
Key Takeaways
Shares of CME Group Inc. (CME - Free Report) have gained 15.5% in the past year, outperforming the industry's growth of 8.1%.
CME Group has outperformed its peers, including Intercontinental Exchange Inc. (ICE - Free Report) , S&P Global Inc. (SPGI - Free Report) and OTC Markets Group Inc. (OTCM - Free Report) . Shares of ICE and SPGI have gained 7.5% and 4.1%, respectively, while OTCM stock has lost 4.4% in the past year.
Image Source: Zacks Investment Research
With a market capitalization of $98.71 billion, the average volume of shares traded in the last three months was 1.9 million. CME has a solid track record of beating earnings estimates in each of the last four quarters, with an average of 1.82%.
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 23.61X is lower than the industry average of 23.83X.
Image Source: Zacks Investment Research
CME Trading Above 50-Day and 200-Day Moving Averages
Shares of CME Group closed at $273.74 on Wednesday and are trading above the 50-day and 200-day simple moving averages (SMA) of $271.90 and $270.71, respectively, 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 2025 earnings per share (EPS) indicates an 8.4% 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 4.3% and 4.9%, respectively, from the corresponding 2025 estimates.
Optimistic Analyst Sentiment for CME
Two of the 10 analysts covering the stock have raised estimates for 2025, and two 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 0.08% and 0.3%, respectively, in the past 30 days.
Target Price Reflects Potential Upside
Based on short-term price targets offered by 16 analysts, the Zacks average price target is $291.38 per share. The average indicates a potential 6.4% 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.
Its solid growth projection, attractive valuation, and positive analyst statement are other positives. 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.