CME - Embedded Expectations Analysis - 2020 10 06
CME Group Inc. (CME:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 34.3x Uniform P/E. At these levels, markets have bullish expectations for the firm, but management may have concerns about expenses, returns, and their client baseSpecifically, management may be overstating their responsiveness to the crisis, their expense discipline, and the potential of the Ultra Bond futures. In addition, they may lack confidence in their ability to capitalize on their next acquisition, maintain revenues, and generate investor interest for their upcoming benchmarks. Furthermore, they may have concerns about the sustainability of demand in display devices, continued declines in the product mix with their active trader segment, and perpetual reduction in their net returns, particularly from their joint venture with S&P. Additionally, they may lack confidence in their ability to sustain their realized synergies, enhance their oil and gas contract with commercial customers, and expand their client base. Moreover, they may be concerned about the price of their micro products from a risk-adjusted perspective, and the additional volumes and volatility from the Federal Reserve's actions
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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