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CME Group Inc Class A CME

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Morningstar’s Analysis

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CME Reports Modest Results as Equity and Interest Rate Volatility Falls

Michael Miller Equity Analyst

Analyst Note

| Michael Miller |

Wide-moat CME group reported decent second-quarter earnings, with EPS of $1.64 coming in roughly in line with the FactSet consensus estimate of $1.61. Revenue was effectively unchanged from the prior-year prior period with reported results of $1.18 billion. Sequentially, revenue decreased 6%, driven primarily by falling equity and interest rate futures trading volume. Despite lower levels of activity, equity futures trading volume is still at a healthy level. Interest rates futures trading volume was below its historical average, a symptom of low interest rates, but still well above the 2020 lows. Based on these results, we are maintaining our $193 fair value estimate for CME.

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Company Profile

Business Description

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 LLC, 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.

20 South Wacker Drive
Chicago, IL, 60606
T +1 312 930-1000
Sector Financial Services
Industry Financial Data & Stock Exchanges
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 4,370