Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating CME Gr CME in comparison to its major competitors within the Capital Markets industry. By analyzing critical 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 | 25.90 | 2.74 | 14.54 | 2.78% | $1.15 | $1.15 | 9.94% |
| S&P Global Inc | 51.28 | 3.27 | 9.81 | 1.42% | $1.21 | $2.08 | 3.61% |
| Intercontinental Exchange Inc | 36.84 | 2.66 | 6.49 | 3.4% | $1.29 | $1.36 | -3.19% |
| Moody's Corporation | 40.86 | 18.50 | 10.56 | 12.49% | $0.67 | $1.07 | 8.18% |
| Nasdaq Inc | 22.25 | 3.91 | 4.03 | 4.31% | $0.44 | $0.6 | -7.67% |
| Tradeweb Markets Inc | 52.98 | 3.42 | 14.45 | 1.75% | $0.16 | $0.21 | 4.53% |
| FactSet Research Systems Inc | 37.60 | 10.65 | 8.44 | 3.96% | $0.15 | $0.27 | 1.13% |
| Morningstar Inc | 431.67 | 8.05 | 5.17 | 2.96% | $0.09 | $0.29 | 7.29% |
| MarketAxess Holdings Inc | 35.58 | 7.72 | 12.24 | 5.24% | $0.1 | $0.13 | -1.31% |
| Donnelley Financial Solutions Inc | 19.89 | 4.28 | 2.12 | 10.64% | $0.07 | $0.14 | -9.05% |
| Open Lending Corp | 19.61 | 3.89 | 5.70 | 5.35% | $0.02 | $0.03 | -26.69% |
| Value Line Inc | 22.19 | 4.80 | 10.40 | 5.74% | $0.0 | $0.01 | -2.02% |
| Average | 70.07 | 6.47 | 8.13 | 5.21% | $0.38 | $0.56 | -2.29% |
Through a detailed examination of CME Gr, we can deduce the following trends:
-
At 25.9, the stock's Price to Earnings ratio is 0.37x less than the industry average, suggesting favorable growth potential.
-
The current Price to Book ratio of 2.74, which is 0.42x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
-
The stock's relatively high Price to Sales ratio of 14.54, surpassing the industry average by 1.79x, may indicate an aspect of overvaluation in terms of sales performance.
-
The company has a lower Return on Equity (ROE) of 2.78%, which is 2.43% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
-
With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.15 Billion, which is 3.03x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
-
The gross profit of $1.15 Billion is 2.05x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
-
The company is experiencing remarkable revenue growth, with a rate of 9.94%, outperforming the industry average of -2.29%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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:
-
In terms of the debt-to-equity ratio, CME Gr has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
-
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.12.
Key Takeaways
The PE, PB, and PS ratios for CME Gr indicate that the company 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, but high EBITDA and gross profit margins. Additionally, the company has shown strong revenue growth compared to its industry peers.
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.
