A Closer Look At CME’s Valuation

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Trefis
CME: CME Group logo
CME
CME Group

CME Group (NASDAQ:CME) has seen impressive growth in recent years. The company’s continued efforts in expanding its global footprint and diverse product line bodes well for its long-term growth outlook. Additionally, CME recently launched bitcoin futures trading on its platform, looking to get an early movers’ advantage in the volatile but fast-growing asset class.

We have a $146 price estimate for CME’s stock, which is below the current market price. We have also created an interactive dashboard which shows our forecasts and estimates for the company going forward; you can modify the key value drivers to see how they impact the exchange’s revenues, bottom line and valuation.

Increased volatility around oil production and prices should drive energy derivative volumes, while rate hikes and improving macro conditions should propel interest rate derivatives volumes.

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We expect 5% annual growth in 2018 revenues due to increased derivative trading. Meanwhile, competition should keep margins in check somewhat, but the recent tax overhaul should drive the company’s net income.

We have used at P/E ratio of 23, for our valuation estimate, but you can modify the multiple in order to come up with your own valuation estimate for the company.

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