In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating CME Gr CME against its key competitors in the Capital Markets industry. By examining key financial metrics, market position, and growth prospects, we aim 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 | 25.42 | 2.72 | 14.31 | 2.65% | $1.1 | $1.13 | 8.96% |
| S&P Global Inc | 56.78 | 3.91 | 11.44 | 2.09% | $1.36 | $2.09 | 7.79% |
| Intercontinental Exchange Inc | 28.72 | 2.78 | 7.23 | 2.2% | $1.2 | $1.42 | 1.76% |
| Nasdaq Inc | 25.01 | 4.98 | 4.60 | 4.63% | $0.55 | $0.61 | -6.81% |
| Tradeweb Markets Inc | 52.56 | 3.63 | 15.18 | 1.89% | $0.17 | $0.21 | 14.36% |
| FactSet Research Systems Inc | 36.30 | 10.02 | 8.21 | 3.96% | $0.15 | $0.27 | 7.31% |
| Morningstar Inc | 169.69 | 9.67 | 6.10 | 3.15% | $0.12 | $0.31 | 10.1% |
| MarketAxess Holdings Inc | 42.78 | 8.97 | 14.45 | 4.66% | $0.09 | $0.12 | 0.1% |
| Donnelley Financial Solutions Inc | 22.70 | 4.66 | 2.40 | 4.75% | $0.05 | $0.11 | -4.61% |
| Open Lending Corp | 42.37 | 4.49 | 7.66 | 1.38% | $0.01 | $0.02 | -48.67% |
| Value Line Inc | 26.68 | 5.49 | 12.06 | 4.07% | $0.0 | $0.01 | -4.53% |
| Average | 50.36 | 5.86 | 8.93 | 3.28% | $0.37 | $0.52 | -2.32% |
By carefully studying CME Gr, we can deduce the following trends:
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The stock's Price to Earnings ratio of 25.42 is lower than the industry average by 0.5x, suggesting potential value in the eyes of market participants.
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Considering a Price to Book ratio of 2.72, which is well below the industry average by 0.46x, the stock may be undervalued based on its book value compared to its peers.
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The Price to Sales ratio of 14.31, which is 1.6x 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 2.65% is 0.63% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
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Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.1 Billion, which is 2.97x above the industry average, indicating stronger profitability and robust cash flow generation.
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With higher gross profit of $1.13 Billion, which indicates 2.17x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 8.96% is notably higher compared to the industry average of -2.32%, showcasing exceptional sales performance and strong demand for its products or services.
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 evaluating CME Gr against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
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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.
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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.
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