Core Viewpoint - CME Group Inc. has underperformed compared to the industry and S&P 500, with a 6.1% gain over the past year versus 20.3% and 23.6% respectively [1] Financial Performance - CME's return on equity over the trailing 12 months was 12.8%, below the industry average of 13.2%, indicating inefficiency in fund utilization [4] - The return on invested capital was 0.4%, significantly lower than the industry average of 4.8% [4] - The company expects expenses, excluding license fees but including cloud migration costs, to reach $1.585 billion in 2024 [3] Growth Projections - The Zacks Consensus Estimate for CME's 2024 earnings per share indicates a year-over-year increase of 6.4%, with revenues projected at $6.01 billion, reflecting a 7.7% improvement [5] - For 2025, revenue estimates suggest a year-over-year increase of 2.7% from 2024 [5] Analyst Sentiment - Six out of eight analysts have raised their estimates for 2024, while two have lowered them; for 2025, seven out of nine analysts have raised estimates [6] - The consensus estimates for 2024 and 2025 have increased by 1.5% and 0.9% respectively over the past 60 days [6] Market Position and Strategy - CME Group holds a 90% market share in global futures trading and clearing services, benefiting from increased electronic trading volume and crypto asset adoption [6] - The company has maintained a free cash flow conversion rate of over 85% in recent quarters, indicating strong earnings [8] - CME's solid capital position supports strategic organic initiatives and product expansion [7] Dividend History - CME has returned approximately $25.2 billion to shareholders since initiating its variable dividend policy in 2012, with a five-year CAGR of 8.9% [10] - The latest dividend increase of 4.5% in February 2024 results in a dividend yield of 2.1%, surpassing the industry average of 1.5% [10] Valuation - CME Group is trading at a forward 12-month price-to-earnings ratio of 21.76X, lower than the industry average of 23.63X, presenting a compelling investment opportunity [12]

Klaus Vedfelt Introduction I spend a lot of time on X (formerly known as Twitter) - probably more than I should. Lately, two things have started to stand out to me: We often discuss consumer weakness. Companies like Dollar General (DG) are seeing tremendous pressure on the lower-income consumer. Even McDonald's (MCD), which is usually protected against consumer weakness, had to come up with measures to grow its sales. While the lower and middle class are struggling, investors with stock market exposure seem ...

Core Insights - CME Group reported its second-highest monthly volume ever in August 2024, with an average daily volume (ADV) of 31.7 million contracts, reflecting a 31% increase compared to the previous year, driven by significant growth across all asset classes [1][2]. Interest Rate Products - The interest rate ADV reached a record 18.3 million contracts, with the U.S. Treasury complex achieving an all-time monthly record ADV of 11.5 million contracts, including record volumes for 2-year, 5-year, and 30-year futures contracts [2][4]. - SOFR futures and options volume increased by 48% to 6.3 million contracts, and BrokerTec cash U.S. Treasury notional volume hit a year-to-date record of $249 billion on August 5 [2][5]. Equity Index Products - Record August ADV for equity index products was 7.5 million contracts, with notable increases in various options and futures, including a 15% increase in overall equity index ADV [3][4]. - Micro E-mini Nasdaq-100 futures ADV increased by 36% to 1.6 million contracts, and E-mini S&P 500 options ADV rose by 9% to 1.5 million contracts [4]. Agricultural Products - Agricultural ADV reached a record of 1.6 million contracts, with specific increases such as corn futures ADV rising by 36% to 435,000 contracts and soybean oil futures ADV increasing by 31% to 163,000 contracts [3][4]. Foreign Exchange Products - Foreign exchange ADV increased by 36%, with significant growth in specific currencies, including Japanese Yen futures ADV rising by 47% to 199,000 contracts and Canadian Dollar futures ADV increasing by 41% to 98,000 contracts [4][5]. Metals Products - Metals ADV saw a substantial increase of 43%, with metals options ADV rising by 119% to 125,000 contracts and gold options ADV increasing by 127% to 96,000 contracts [4][5]. International Activity - Record international ADV of 8.9 million contracts was reported, with EMEA ADV at 6.5 million contracts, Asia ADV up by 37%, and Latin America ADV up by 18% [5]. Micro Products - Micro products also showed strong performance, with Micro E-mini Equity Index futures and options ADV of 3 million contracts representing 41% of overall equity index ADV, and Micro Bitcoin futures ADV increasing by 585% to 48,000 contracts [5]. Additional Highlights - A record single-day volume of $13.5 billion for FX Link was achieved on August 5, and U.S. Repo average daily notional value increased by 1% to $295 billion [5].

Group 1 - BofA Securities analyst Craig Siegenthaler downgraded CME Group Inc from Neutral to Underperform, lowering the price target from $212 to $177 due to increased competition from BGC Group, Cboe Global Markets, and Intercontinental Exchange [1] - CME is expected to reduce pricing on interest rate futures by over 10% as a defensive strategy in response to the upcoming launch of BGC's FMX Futures Exchange [2] - CBOE's index options volume is projected to grow at a 15% CAGR through 2026, indicating a potential shift where options may increasingly replace CME's equity futures [2] Group 2 - The VIX surged 34% to an average of 19 in August, up from 14 the previous month, driven by weak U.S. employment data, leading to CME's strongest trading volumes since the COVID-19 pandemic [3] - CME's trading volumes in August rose 28% month-over-month, particularly in financial futures, contributing to its stock outperforming all sectors in coverage and the S&P 500 [4] - Despite the current high volatility, a downward normalization is anticipated throughout 2025, suggesting the second half of 2024 may be an appropriate time for the Underperform rating [4]

Core Insights - CME Group has set a new record for open interest in SOFR futures, reaching 12,701,232 contracts on August 28, 2024, with an average daily volume of 3.5 million contracts year-to-date [1][2] Group 1: SOFR Futures Performance - The average daily volume for CME Group SOFR options is 1.6 million contracts year-to-date, with open interest exceeding 42 million contracts [2] - SOFR futures, launched in May 2018, have seen broad participation from various market participants including global banks, hedge funds, and asset managers [3] Group 2: Market Position and Offerings - CME Group is recognized as the world's leading derivatives marketplace, providing tools for managing interest rate risk with high efficiency and liquidity [2] - The company offers a wide range of global benchmark products across major asset classes, including interest rates, equity indexes, foreign exchange, energy, agricultural products, and metals [4]

Investors in CME Group Inc. (CME) need to pay close attention to the stock based on moves in the options market lately. That is because the Sep. 20, 2024 $180 Call had some of the highest implied volatility of all equity options today. What is Implied Volatility? Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also m ...

CME Group logo displayed on a phone screen and a laptop keyboard are seen in this illustration photo ... [+] taken in Krakow, Poland on January 29, 2023. (Photo by Jakub Porzycki/NurPhoto via Getty Images) NurPhoto via Getty Images CME Group's stock (NASDAQ: CME) has largely traded sideways since the beginning of the year and has not seen much change as compared to the 17% rise in the S&P 500 over the same period. In sharp contrast, CME Group's peer Intercontinental Exchange (NYSE: ICE) is up 25% YTD. We be ...

CHICAGO, Aug. 28, 2024 /PRNewswire/ -- CME Group, the world's leading derivatives marketplace, today announced that it will launch two new wheat spread futures contracts on October 14, pending regulatory review. The CBOT Wheat - Euronext Milling Wheat No. 2 Spread futures contract and the KC HRW Wheat - Euronext Milling Wheat No. 2 Spread futures contract will each be U.S. dollar-denominated in metric tons and based on the spread between either CBOT Wheat futures prices or KC HRW Wheat futures prices and Eu ...

CHICAGO, Aug. 27, 2024 /PRNewswire/ -- CME Group, the world's leading derivatives marketplace, today announced it will further expand its cryptocurrency derivatives offerings with the introduction of Bitcoin Friday futures (BFF) on September 30, pending regulatory review. Sized at one-fiftieth of one bitcoin, these new weekly futures contracts will be cash-settled to the CME CF Bitcoin Reference Rate New York Variant (BRRNY) at 4:00 p.m. New York time every Friday. A new BFF contract will be listed every Th ...

18 il and and and Richard Drury Much attention is focused on owning hard assets such as physical real estate and energy pipelines, and while those are great asset classes to have in a portfolio, financial real estate can be just as compelling for long-term investors. What I would call financial real estate includes investment platforms like the Intercontinental Exchange (ICE) and Nasdaq (NDAQ), which facilitate global trading activity. Thanks to the digitization of trading platforms, transaction volume has ...