CME - Embedded Expectations Analysis - 2020 01 28
ï€ CME Group Inc. (CME:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Assets, with a 47.9x Uniform P/E. At these levels, markets have bullish expectations for the firm, but management appears concerned about new client growth, Federal Reserve activity, and their sales teamsï€ Specifically, management may lack confidence in their ability to sustain volume growth and attract new clients and retail futures traders. Moreover, they may be exaggerating their innovation capacity, their ability to realize expense synergies, and the quality of their messaging policy. Furthermore, management may be downplaying concerns about product cannibalization, and they may be concerned about the Federal Reserve's purchase of T-Bills and entrance into the repo market and the sustainability of SOFR futures contract activity. Finally, they may be exaggerating the quality of their sales teams and their ability to target leads in specific segments in Asia and Europe
CME Group is a holding company. Through its subsidiaries, the company exchanges provides a range of global benchmark products across asset classes based on interest rates, equity indexes, foreign exchange (FX), agricultural, energy and metal commodities. The company provides futures and options on futures trading across asset classes through its subsidiary, Chicago Mercantile Exchange Inc. (CME) Globex platform, cash and repo fixed income trading via BrokerTec, and cash and OTC FX trading via EBS. In addition, the company operates central counterparty clearing providers, CME Clearing, a division of CME. The company also provides optimization, reconciliation and processing services through TriOptima, Traiana and Reset.
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