CME Group Battles Market Headwinds Despite Strong Earnings
Located in Chicago, Illinois, CME Group Inc. (CME) stands out in the field of derivatives trading and risk management. With a market cap of $82.8 billion, CME Group runs the largest financial derivatives exchange globally, offering crucial tools for businesses and investors to navigate risks across various asset classes like commodities, currencies, and interest rates.
CME Stock vs. Market Performance
In recent times, CME Group’s shares have struggled when compared to the broader market. Over the past year, CME stock has only returned 7.6%, while the S&P 500 Index ($SPX) surged by 30.1%. For 2024, CME’s stock is up 8.3%, compared to the S&P’s rise of 24.1% year-to-date.
Looking at detailed comparisons, CME’s performance falls short of the iShares U.S. Broker-Dealers & Securities Exchanges ETF’s (IAI) remarkable 55% returns over the last 52 weeks, and 37.9% year-to-date.
Challenges and Earnings Report
CME Group’s recent underperformance can be attributed to a mix of factors, including declining trading volumes, growing competition, regulatory issues, and uncertainties in future trading growth amid broader economic challenges. However, after releasing its Q3 earnings on Oct. 23, the company saw a slight increase in shares. They reported an adjusted EPS of $2.68, marking a solid 19.1% year-over-year increase and surpassing analyst expectations of $2.65. Revenue also impressed, reaching $1.58 billion, an 18.4% year-over-year increase, and slightly above the consensus forecast of $1.57 billion.
For the current fiscal year ending in December, analysts project that CME’s EPS will grow by 9.4% to $10.22 on a diluted basis. Historically, the company has maintained a strong earnings surprise record, beating the consensus estimate in each of the last four quarters.
Analyst Ratings and Price Targets
Among the 17 analysts analyzing CME stock, the general consensus is a “Moderate Buy.” This includes six “Strong Buy” ratings, eight “Holds,” one “Moderate Sell,” and two “Strong Sells.” This viewpoint is less optimistic than three months prior, when seven analysts labeled the stock as a “Strong Buy.”
On Nov. 11, Deutsche Bank (DB) slightly reduced CME Group’s price target to $226 from $227 while maintaining a “Hold” rating. Their decision reflects a mixed economic outlook, suggesting potential for increased market activity but cautioning against inflationary risks that might hinder interest rate reductions.
The mean price target currently sits at $236.50, indicating a 3.7% premium to CME’s present price. The highest price target from analysts is $275, offering a possible upside of 20.6%.
On the date of publication, Rashmi Kumari did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data provided are for informational purposes only. For further details, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily represent those of Nasdaq, Inc.
