In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating CME Gr CME vis-à-vis its key competitors in the Capital Markets industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight 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 | 24.19 | 2.59 | 13.62 | 2.65% | $1.1 | $1.13 | 8.96% |
| S&P Global Inc | 55.87 | 3.84 | 11.25 | 2.09% | $1.36 | $2.09 | 7.79% |
| Intercontinental Exchange Inc | 29.15 | 2.82 | 7.34 | 2.2% | $1.2 | $1.42 | 1.76% |
| Nasdaq Inc | 25.13 | 5 | 4.62 | 4.63% | $0.55 | $0.61 | -6.81% |
| Tradeweb Markets Inc | 55.28 | 3.82 | 15.97 | 1.89% | $0.17 | $0.21 | 14.36% |
| FactSet Research Systems Inc | 37.07 | 10.23 | 8.38 | 8.95% | $0.23 | $0.29 | 1.2% |
| Morningstar Inc | 164.64 | 9.38 | 5.92 | 3.15% | $0.12 | $0.31 | 10.1% |
| MarketAxess Holdings Inc | 41.77 | 8.76 | 14.11 | 4.66% | $0.09 | $0.12 | 0.1% |
| Donnelley Financial Solutions Inc | 21.98 | 4.52 | 2.32 | 4.75% | $0.05 | $0.11 | -4.61% |
| Open Lending Corp | 41.32 | 4.38 | 7.47 | 1.38% | $0.01 | $0.02 | -48.67% |
| Value Line Inc | 25.17 | 5.17 | 11.38 | 4.07% | $0.0 | $0.01 | -4.53% |
| Average | 49.74 | 5.79 | 8.88 | 3.78% | $0.38 | $0.52 | -2.93% |
By closely examining CME Gr, we can identify the following trends:
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A Price to Earnings ratio of 24.19 significantly below the industry average by 0.49x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The current Price to Book ratio of 2.59, which is 0.45x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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The Price to Sales ratio of 13.62, which is 1.53x 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 1.13% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.1 Billion, which is 2.89x above the industry average, indicating 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 -2.93%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to 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 considering the Debt-to-Equity ratio, CME Gr can be compared to its top 4 peers, leading to the following observations:
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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 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.
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