In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing CME Gr CME alongside its primary competitors in the Capital Markets industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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 | 26.11 | 2.76 | 14.65 | 2.78% | $1.15 | $1.15 | 9.94% |
| S&P Global Inc | 49.32 | 3.14 | 9.44 | 1.42% | $1.21 | $2.08 | 3.61% |
| Intercontinental Exchange Inc | 35.78 | 2.58 | 6.31 | 3.4% | $1.29 | $1.36 | -3.19% |
| Moody's Corporation | 39.83 | 18.03 | 10.29 | 12.49% | $0.67 | $1.07 | 8.18% |
| Nasdaq Inc | 22.34 | 3.93 | 4.04 | 4.31% | $0.44 | $0.6 | -7.67% |
| Tradeweb Markets Inc | 52.66 | 3.40 | 14.36 | 1.75% | $0.16 | $0.21 | 4.53% |
| FactSet Research Systems Inc | 35.88 | 10.16 | 8.05 | 3.96% | $0.15 | $0.27 | 1.13% |
| Morningstar Inc | 415.81 | 7.75 | 4.98 | 2.96% | $0.09 | $0.29 | 7.29% |
| MarketAxess Holdings Inc | 35.07 | 7.61 | 12.07 | 5.24% | $0.1 | $0.13 | -1.31% |
| Donnelley Financial Solutions Inc | 18.75 | 4.04 | 2 | 10.64% | $0.07 | $0.14 | -9.05% |
| Open Lending Corp | 17.64 | 3.50 | 5.13 | 5.35% | $0.02 | $0.03 | -26.69% |
| Value Line Inc | 17.60 | 3.81 | 8.25 | 5.74% | $0.0 | $0.01 | -2.02% |
| Average | 67.33 | 6.18 | 7.72 | 5.21% | $0.38 | $0.56 | -2.29% |
When closely examining CME Gr, the following trends emerge:
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At 26.11, the stock's Price to Earnings ratio is 0.39x less than the industry average, suggesting favorable growth potential.
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Considering a Price to Book ratio of 2.76, which is well below the industry average by 0.45x, the stock may be undervalued based on its book value compared to its peers.
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The Price to Sales ratio of 14.65, which is 1.9x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The Return on Equity (ROE) of 2.78% is 2.43% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.15 Billion is 3.03x above the industry average, highlighting stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $1.15 Billion, which indicates 2.05x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 9.94% exceeds the industry average of -2.29%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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:
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CME Gr demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.12, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by 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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