What To Expect From CME Group Stock?

+16.42%
Upside
177
Market
206
Trefis
CME: CME Group logo
CME
CME Group

CME Group’s stock (NYSE: CME) lost 51% in 2022, while the S&P500 decreased 19% over the same period. Further, at its current price of $170 per share, CME is trading 17% below its fair value of $206 – Trefis’ estimate for CME Group’s valuationThe company surpassed the consensus estimates in the third quarter of 2022, with total revenues increasing by 11% y-o-y to $1.2 billion. The growth was driven by a 14% rise in clearing & transaction fees and a 6% improvement in market data & information services revenues. Notably, the clearing & transaction fees benefited from a 26% rise in the aggregate average daily volume (ADV). On the cost front, total expenses as a % of revenues decreased in the quarter. However, the effect was more than offset by a significant drop in total non-operating income from $482 million to $141 million. Overall, the adjusted net income was reduced by 28% y-o-y to $671 million.

The company’s top line grew 8% y-o-y to $3.8 billion in the first nine months of 2022. It was primarily due to a 12% rise in clearing & transaction fees, followed by a 5% increase in market data & information services. The growth in clearing & transaction fees was driven by higher trading activity – aggregate ADV jumped 23% y-o-y over the same period. Despite the revenue growth, the firm posted a marginal improvement in the adjusted net income to $2.03 billion.

The firm recently released its fourth quarter volumes, with Q4 quarterly ADV increasing by 6% y-o-y. We expect the fourth quarter results to be on similar lines as the last quarter. Overall, CME Group revenues are estimated to touch $5.04 billion in FY2022. Additionally, CME’s adjusted net income is likely to touch $2.9 billion in the year. This coupled with an annual EPS of $7.99 and a P/E multiple of just below 26x will lead to a valuation of $206.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jan 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 CME Return 1% 1% 47%
 S&P 500 Return -1% -1% 70%
 Trefis Multi-Strategy Portfolio 1% 1% 216%
Relevant Articles
  1. CME Group Stock To Beat The Street Expectations In Q3?
  2. CME Group Stock To Edge Past Expectations In Q2?
  3. Is CME Group Stock Undervalued?
  4. CME Group Stock Topped The Consensus In Q1, Is It A Buy?
  5. CME Group Stock To Miss The Earnings Consensus In Q4?
  6. Is CME Group Stock Fairly Priced?

[1] Month-to-date and year-to-date as of 1/6/2023
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates