Optional product analytics
With your permission, we use privacy-limited analytics to understand which research journeys work. We do not run advertising trackers or session replay. You can change this choice in Preferences. Read the Privacy Policy.
Bull: Prolonged macroeconomic uncertainty, fluctuating interest rates, and geopolitical shifts drive record hedging activity and volume across CME's product suite.
ZIRP Return: A return to zero interest rate policy permanently impairs interest rate volatility, collapsing core derivative trading volumes.
CME Group exhibits a perfect textbook archetype fit as a Mature Compounder with highly predictable margins and monopolistic barriers. However, the stock is priced for perfection, trading at an extreme PEG premium relative to peers and assuming 8.5% structural growth.
CME Group exhibits a perfect textbook archetype fit as a Mature Compounder with highly predictable margins and monopolistic barriers. However, the stock is priced for perfection, trading at an extreme PEG premium relative to peers and assuming 8.5% structural growth.
Near-monopoly network effects in interest rate, energy, and agricultural derivatives.
Vertically integrated clearinghouse acting as an insurmountable competitive barrier.
High macroeconomic uncertainty, fluctuating rates, and geopolitical shifts drive record hedging.
Reduce based on an overextended valuation that leaves no margin of safety for a mature exchange operator.
CME Group Inc., together with its subsidiaries, operates contract markets for the trading of futures and options on futures contracts worldwide. It offers futures and options products based on interest rates, equity indexes, and foreign exchange; and agricultural, energy, and metals commodities, as well as fixed income and foreign currency trading services. The company provides clearing house services, including clearing, settling, and guaranteeing futures and options contracts, and cleared swaps products traded through its exchanges. In addition, the company offers a range of market data services, including real-time and historical data services. It serves professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, governments, and central banks. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007. The company was founded in 1898 and is headquartered in Chicago, Illinois.
A return to zero interest rate policy (ZIRP) crushes interest rate volatility, dramatically suppressing trading volumes. Simultaneous regulatory pressure limits data fee extraction, resulting in stagnating earnings and multiple compression.
A return to zero interest rate policy (ZIRP) crushes interest rate volatility, dramatically suppressing trading volumes. Simultaneous regulatory pressure limits data fee extraction, resulting in stagnating earnings and multiple compression toward the mid-teens.
A return to zero interest rate policy permanently impairs interest rate volatility, collapsing core derivative trading volumes.
Aggressive federal intervention caps market data and clearing fees, structurally limiting high-margin streams.
The five developments that would weaken our investment case.
Operational expenses outpacing transaction revenues impairs structural profitability, signaling that severe volume compression or cost inflation is eroding high-margin clearing returns.
Current:Operating margin was 64.9% for the period ended 2025-12-31
Alert ifFalls below 60.0% over any trailing twelve-month period
Near-monopoly network effects in interest rate, energy, and agricultural derivatives.
Vertically integrated clearinghouse acting as an insurmountable competitive barrier.
Economic profit is supported when reported returns exceed the company cost-of-capital hurdle.
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Project SBC-adjusted , discount each year's earnings at , then add a Gordon-growth .
Unavailable
The highlighted base cell is anchored to composite fair-value midpoint ($261.16). It is the reference value for this grid, not a separate standalone fair-value claim.
FCFF DCF remains positive at the base case: base FCFF $4.4B after capex $97.8M, with terminal value at 58.3% of enterprise value. No FCF cliff is projected unless capex/revenue or gross margin materially resets.
Prolonged macroeconomic uncertainty, fluctuating interest rates, and geopolitical shifts drive record hedging activity and volume across CME's product suite. The company pushes through pricing increases uninhibited, scaling margins further and driving low-double-digit EPS growth.
Does CME successfully offset any rate volume declines with structural pricing power in data?
Does CME successfully offset any rate volume declines with structural pricing power in data?
Does CME successfully offset any rate volume declines with structural pricing power in data?
Does CME successfully offset any rate volume declines with structural pricing power in data?
Warning level: Falls below 60.0% over any trailing twelve-month period. Operational expenses outpacing transaction revenues impairs structural profitability, signaling that severe volume compression or cost inflation is eroding high-margin clearing returns.
Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.
| Revenue | 6,520,600,000 |
|---|---|
| Cost of revenue | 907,000,000 |
| Gross profit | 5,613,600,000 |
| Operating expenses | 1,384,100,000 |
| Operating income | 4,229,500,000 |
| Non-operating items and tax | -157,300,000 |
| Net income | 4,072,200,000 |
| Total assets | 198,424,200,000 |
|---|---|
| Cash | 4,416,900,000 |
| Current assets | 165,359,300,000 |
| Total liabilities | 169,696,000,000 |
| Current liabilities | 160,296,700,000 |
| Shareholders’ equity | 28,728,200,000 |
Point-in-time financial data used in the 2026-05-20 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021-12-31 | 4.7B | 3.9B | 2.6B | 2.4B | 2.3B | 127.2M | 385.4M | 75.2M | — | 2.2B | 0 | — | — | — | — | 2.8B | 3.4B | 56.4% | — | 4.2% | — |
| 2022-12-31 | 5B | 4B | 2.7B | 3.1B | 3B | 89.7M | 362.6M | 84.3M | — | 2.6B | -15.2M | — | — | — | — | 2.7B | 3.4B | 60.1% | — | 6.5% | — |
| 2023-12-31 | 5.6B | 4.7B | 3.2B | 3.5B | 3.4B | 76.4M | 352.6M | 82.9M | 0 | 3.2B | -16.4M | — | — | — | — | 2.9B | 3.4B | 61.6% | — | 6.7% | — |
| 2024-12-31 | 6.1B | 5B | 3.5B | 3.7B | 3.6B | 94M | 336.8M | 89.5M | 0 | 3.6B | 0 | — | — | — | — | 2.9B | 3.4B | 64.1% | — | 7.7% | — |
| 2025-12-31 | 6.5B | 5.8B | 4.1B | 4.3B | 4.2B | 83.5M | 330.9M | 94.8M | 266.1M | 3.9B | -9.4M | — | — | — | — | 4.4B | 3.4B | 64.9% | — | 6.8% | — |
CME trades at 23.5x forward earnings against a peer median of 20.8x; EV/EBITDA of 23.1x against a peer median of 19.0x; 6 peers.
Normal capital cycle phase with extraordinarily low 1.5% maintenance capex to revenue.
High macroeconomic uncertainty, fluctuating rates, and geopolitical shifts drive record hedging.
Low volatility environments, such as ZIRP, structurally depress trading activity.
Normal capital cycle phase with extraordinarily low 1.5% maintenance capex to revenue.
Avoid allocating new capital given extreme PEG dispersion and negative margin of safety.
Harvest profits or reduce exposure given 14% premium to composite fair value.
Upside case depends on the report valuation range and named growth catalysts.
The final midpoint of $261.16 bridges highly conservative near-term forward models with bullish owner earnings. The composite rests ~15% below internal valuation anchors ($306), reflecting extreme implied growth demands.
Reduce. Market prices imply unachievable steady-state pricing power and 8.5% growth for a mature financial operator.
Reassess the thesis against the named valuation, risk, and quarterly checkpoint evidence in this report.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
Decentralized ledgers bypass traditional clearinghouses, destroying CME's core wide-moat monopolistic advantage over the long term.
Top-line deceleration undermines operating leverage and signals transactional volume fatigue, triggering valuation multiple compression toward historical cyclical trough ranges.
Current:Revenue growth was 6.4% for the period ended 2025-12-31
Alert ifSlows to 2.0% or lower over any fiscal year
Interest rate products represent the primary earnings engine, meaning sustained activity declines directly compress transactional clearing revenues and diminish market depth.
Current:Core derivative trading volumes sensitive to rate volatility as of 2026-05-20
Alert ifContracts by more than 15.0% year-over-year across two consecutive quarters
Statutory limitations on high-margin data services restrict recurring revenue diversification, eliminating predictable non-transactional cash flows that insulate operating income during cyclical volume downturns.
Current:Uncapped proprietary market data and clearing fee structure as of 2026-05-20
Alert ifEnactment of federal statutory fee caps or mandatory fee reductions within 24 months
Liquidity fragmentation to alternative trading venues breaks the self-reinforcing network effects of centralized clearing, forcing defensive fee cuts and permanently impairing pricing power.
Current:Dominant clearinghouse position across agricultural and energy commodities as of 2026-05-20
Alert ifLoss of more than 5.0% market share to competing venues within a twelve-month period
| Monitor |
| Monitor the threat against the report checkpoints. |
This edition does not contain enough finite inputs to reproduce the lens calculation.
Project EPS through the explicit advantage period, fade growth as competition catches up, and discount the full stream at cost of equity.
This edition does not contain enough finite inputs to reproduce the lens calculation.
Apply a terminal P/E to the dated forward EPS path, then discount that future share value back to the analysis date.
This edition does not contain enough finite inputs to reproduce the lens calculation.
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and terminal value at WACC, then adjust for signed net debt per current share.
This edition does not contain enough finite inputs to reproduce the lens calculation.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
This edition does not contain enough finite inputs to reproduce the lens calculation.
Multiply the peer median PEG by this stock's forecast growth to derive an implied forward P/E, then apply it to forward EPS.
This edition does not contain enough finite inputs to reproduce the lens calculation.
CME Group benefits from near-monopoly network effects in interest rate, energy, and agricultural derivatives. Its vertically integrated clearinghouse acts as a massive competitive barrier. As a mature compounder, it generates extraordinary margins and massive free cash flow.
Warning level: Slows to 2.0% or lower over any fiscal year. Top-line deceleration undermines operating leverage and signals transactional volume fatigue, triggering valuation multiple compression toward historical cyclical trough ranges.
Warning level: Contracts by more than 15.0% year-over-year across two consecutive quarters. Interest rate products represent the primary earnings engine, meaning sustained activity declines directly compress transactional clearing revenues and diminish market depth.
Warning level: Enactment of federal statutory fee caps or mandatory fee reductions within 24 months. Statutory limitations on high-margin data services restrict recurring revenue diversification, eliminating predictable non-transactional cash flows that insulate operating income during cyclical volume downturns.
Warning level: Loss of more than 5.0% market share to competing venues within a twelve-month period. Liquidity fragmentation to alternative trading venues breaks the self-reinforcing network effects of centralized clearing, forcing defensive fee cuts and permanently impairing pricing power.
| Margin |
|---|
| CME | CME Group Inc. | $109.6B | 23.5x | 16.2x | 23.1x | — | — |
| SPGI | S&P Global Inc. | 18.5x | 7.7x | 17.6x | 13.9% | 44.3% | |
| ICE | Intercontinental Exchange Inc. | 17.5x | 8.4x | 16.2x | 13.9% | 57.3% | |
| MCO | Moody's Corporation | 23.4x | 9.6x | 21.5x | 71.4% | 45.7% | |
| NDAQ | Nasdaq Inc. | 20.8x | 9.6x | 19.0x | 16.2% | 48.4% | |
| MSCI | MSCI Inc. | 25.7x | 13.0x | 25.4x | — | 53.7% |
