CME - Embedded Expectations Analysis - 2020 04 28
ï€ CME Group Inc. (CME:USA) currently trades above corporate average relative toUAFRS-based (Uniform) earnings, with a 33.3x Uniform P/E. At these levels, markets have bullish expectations for the firm, but management appears concerned about transaction growth, their NEX acquisition, and oil prices
ï€ Specifically, management may be concerned about the impact of uncleared margin rules on their clients, and they may be overstating the success of their NEX integration and synergy realization. In addition, they may lack confidence in their ability to sustain contract volume and interest rate swap transaction growth and maintain their record natural gas futures market share, and they may have concerns about the implications of the downdraft on oil price on global growth. Finally, they may lack confidence in their sales force's ability to create capital and operational efficiencies and in their ability to sustain traction in their innovative products, including SOFR futures and CME FX Link
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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