In the fast-paced 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 in comparison to its major competitors within the Capital Markets industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in 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 | 26.23 | 2.81 | 14.77 | 2.65% | $1.1 | $1.13 | 8.96% |
| S&P Global Inc | 55.16 | 3.79 | 11.11 | 2.09% | $1.36 | $2.09 | 7.79% |
| Intercontinental Exchange Inc | 26.69 | 2.59 | 6.72 | 2.2% | $1.2 | $1.42 | 1.76% |
| Nasdaq Inc | 25.22 | 5.02 | 4.64 | 4.63% | $0.55 | $0.61 | -6.81% |
| Tradeweb Markets Inc | 55.02 | 3.80 | 15.89 | 1.89% | $0.17 | $0.21 | 14.36% |
| FactSet Research Systems Inc | 37.73 | 10.65 | 8.47 | 3.96% | $0.15 | $0.27 | 7.31% |
| Morningstar Inc | 171.57 | 9.77 | 6.16 | 3.15% | $0.12 | $0.31 | 10.1% |
| MarketAxess Holdings Inc | 36.19 | 7.59 | 12.23 | 4.66% | $0.09 | $0.12 | 0.1% |
| Donnelley Financial Solutions Inc | 21.68 | 4.45 | 2.29 | 4.75% | $0.05 | $0.11 | -4.61% |
| Open Lending Corp | 35.26 | 3.74 | 6.38 | 1.38% | $0.01 | $0.02 | -48.67% |
| Average | 51.61 | 5.71 | 8.21 | 3.19% | $0.41 | $0.57 | -2.07% |
Through a meticulous analysis of CME Gr, we can observe the following trends:
-
A Price to Earnings ratio of 26.23 significantly below the industry average by 0.51x suggests undervaluation. This can make the stock appealing for those seeking growth.
-
With a Price to Book ratio of 2.81, significantly falling below the industry average by 0.49x, it suggests undervaluation and the possibility of untapped growth prospects.
-
With a relatively high Price to Sales ratio of 14.77, which is 1.8x the industry average, the stock might be considered overvalued based on sales performance.
-
With a Return on Equity (ROE) of 2.65% that is 0.54% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
-
The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.1 Billion is 2.68x above the industry average, highlighting stronger profitability and robust cash flow generation.
-
With higher gross profit of $1.13 Billion, which indicates 1.98x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
-
The company's revenue growth of 8.96% is notably higher compared to the industry average of -2.07%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.
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.
By evaluating CME Gr against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
-
When comparing the debt-to-equity ratio, CME Gr is in a stronger financial position compared to its top 4 peers.
-
The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.12.
Key Takeaways
The valuation analysis for CME Gr in the Capital Markets industry indicates that its PE ratio is low compared to its peers, suggesting that the company may be undervalued. The PB ratio is also low, indicating that the stock may be trading at a discount to its book value. However, the PS ratio is high, suggesting that the company's stock price may be overvalued relative to its revenue. In terms of profitability, CME Gr has a low ROE, indicating lower returns on shareholder equity. On the other hand, the company has high EBITDA, gross profit, and revenue growth, indicating strong financial performance.
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.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
