In the dynamic and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating CME Gr CME and its primary competitors in the Capital Markets industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within the industry.
CME Gr Background
Based in Chicago, CME Group operates exchanges giving investors, suppliers, and businesses the ability to trade futures and derivatives based on interest rates, equity indexes, foreign currencies, energy, metals, and commodities. The CME was founded in 1898 and in 2002 completed its initial public offering. Since then, CME Group has consolidated parts of the industry by merging with crosstown rival, CBOT Holdings in 2007 before acquiring Nymex Holdings in 2008 and NEX in 2018. In addition, the company has a 27% stake in S&P Dow Jones Indices, making the Chicago Mercantile Exchange the exclusive venue to trade and clear S&P futures contracts. Through CME's acquisition of NEX in 2018 it has also expanded into cash foreign exchange, fixed income trading, and collateral optimization.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| CME Group Inc | 25.29 | 2.71 | 14.25 | 2.65% | $1.1 | $1.13 | 8.96% |
| S&P Global Inc | 53.52 | 3.68 | 10.78 | 2.09% | $1.36 | $2.09 | 7.79% |
| Intercontinental Exchange Inc | 26.02 | 2.52 | 6.55 | 2.2% | $1.2 | $1.42 | 1.76% |
| Nasdaq Inc | 24.28 | 4.83 | 4.47 | 4.63% | $0.55 | $0.61 | -6.81% |
| Tradeweb Markets Inc | 54.31 | 3.76 | 15.69 | 1.89% | $0.17 | $0.21 | 14.36% |
| FactSet Research Systems Inc | 37.87 | 10.69 | 8.51 | 3.96% | $0.15 | $0.27 | 7.31% |
| Morningstar Inc | 164.08 | 9.35 | 5.90 | 3.15% | $0.12 | $0.31 | 10.1% |
| MarketAxess Holdings Inc | 34.71 | 7.28 | 11.73 | 4.66% | $0.09 | $0.12 | 0.1% |
| Donnelley Financial Solutions Inc | 21.06 | 4.33 | 2.23 | 4.75% | $0.05 | $0.11 | -4.61% |
| Open Lending Corp | 31.21 | 3.31 | 5.65 | 1.38% | $0.01 | $0.02 | -48.67% |
| Value Line Inc | 21.58 | 4.67 | 10.12 | 5.74% | $0.0 | $0.01 | -2.02% |
| Average | 46.86 | 5.44 | 8.16 | 3.44% | $0.37 | $0.52 | -2.07% |
Upon a comprehensive analysis of CME Gr, the following trends can be discerned:
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With a Price to Earnings ratio of 25.29, which is 0.54x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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Considering a Price to Book ratio of 2.71, which is well below the industry average by 0.5x, the stock may be undervalued based on its book value compared to its peers.
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The Price to Sales ratio of 14.25, which is 1.75x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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With a Return on Equity (ROE) of 2.65% that is 0.79% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.1 Billion, which is 2.97x above the industry average, implying stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $1.13 Billion, which indicates 2.17x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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With a revenue growth of 8.96%, which surpasses the industry average of -2.07%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When assessing CME Gr against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
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CME Gr exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.12.
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This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.
Key Takeaways
The PE, PB, and PS ratios for CME Gr indicate that the company's stock is undervalued compared to its peers in the Capital Markets industry. The low PE and PB ratios suggest that the stock is trading at a lower price relative to its earnings and book value. However, the high PS ratio indicates that the stock is trading at a higher price relative to its sales. In terms of profitability, CME Gr has a low ROE, indicating lower returns on shareholder equity compared to its peers. On the other hand, the company has high EBITDA, gross profit, and revenue growth, suggesting strong financial performance in terms of operating income and sales growth.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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