CME Group currently trades at $267.06 per share and has shown little upside over the past six months, posting a middling return of 1.6%. The stock also fell short of the S&P 500’s 23.2% gain during that period.
Is now the time to buy CME Group, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free for active Edge members.
Why Is CME Group Not Exciting?
We're cautious about CME Group. Here are two reasons there are better opportunities than CME and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years.
Regrettably, CME Group’s revenue grew at a tepid 4.7% compounded annual growth rate over the last five years. This was below our standard for the financials sector.
2. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
CME Group’s EPS grew at an unimpressive 8.6% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 4.7% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
CME Group isn’t a terrible business, but it doesn’t pass our quality test. With its shares lagging the market recently, the stock trades at 24× forward P/E (or $267.06 per share). This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere. We’d recommend looking at a top digital advertising platform riding the creator economy.
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