August 15, 2024
Top 10 Stock CME Group Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: CME Group – Top 10 Stock in Dow Jones U.S. Investment Services Index
CME Group is listed as a top 10 stock on August 15, 2024 in the market index D.J. US Investing because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 46 (46% performer), Obermatt assesses an overall hold recommendation for CME Group on August 15, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Financial Exchanges & Data |
| Index | NASDAQ, D.J. US Investing, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View CME Group Hold
| 360 METRICS | August 15, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 28 |
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| GROWTH | ||||||||
| GROWTH | 9 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| SENTIMENT | ||||||||
| SENTIMENT | 65 |
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| 360° VIEW | ||||||||
| 360° VIEW | 46 |
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ANALYSIS: With an Obermatt 360° View of 46 (better than 46% compared with alternatives), overall professional sentiment and financial characteristics for the stock CME Group are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for CME Group. The consolidated Sentiment Rank has a good rank of 65, which means that professional investors are more optimistic about the stock than for 65% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 100 or better than 100% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 28, meaning that the share price of CME Group is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 9. ...read more
RECOMMENDATION: With a consolidated 360° View of 46, CME Group is worse than 54% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 65) and safe financing practices (Safety Rank of 100), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of CME Group̣ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for CME Group positive
ANALYSIS: With an Obermatt Sentiment Rank of 65 (better than 65% compared with alternatives), overall professional sentiment and engagement for the stock CME Group is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for CME Group. Analyst Opinions are at a rank of 52 (better than 52% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 79, which means that stock research experts are changing their opinions for the better in recommending investing in the company. In other words, they are getting even more optimistic about investments in CME Group. Finally, the Professional Investors rank is 65, which means that currently, professional investors hold more stock in this company than in 65% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 65 (more positive than 65% compared with investment alternatives), CME Group has a reputation among professional investors that is above-average compared with that of its competitors. Pros tend to favor investing in this company. But there is also a signal for caution. Market Pulse has a rank of 49, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 51% of competitors). This could mean future risks and should make investors careful. Attention to negative news for CME Group is worthwhile because they may be early warning signals. Without those, all other professional signals are encouraging, especially since analysts are getting more optimistic. ...read more
Value Strategy: CME Group Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 28 (worse than 72% compared with alternatives), CME Group shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for CME Group. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 58% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 3 which means that the stock price compared with what market professionals expect for future profits is higher than 97% of comparable companies, indicating a low value concerning CME Group's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 35 which means that the stock price compared with what market professionals expect for future profit levels is higher than 65% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 45 is also low. Compared with invested capital, the stock price is higher than for 55% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 28, is a hold recommendation based on CME Group's stock price compared with the company's operational size and dividend yields. Should dividend investors pick CME Group? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose CME Group only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: CME Group Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 9 (better than 9% compared with alternatives), CME Group shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for CME Group. Sales Growth has a rank of 19, which means that currently professionals expect the company to grow less than 81% of its competitors. The same is valid for Profit Growth, with a rank of 28, and Capital Growth with 31. In addition, Stock Returns have a below market rank of 26, which means that the stock returns have recently been below 74% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 9, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: CME Group Debt Financing Safety very solid
| SAFETY METRICS | August 15, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 77 |
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| REFINANCING | ||||||||
| REFINANCING | 77 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 94 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 100 |
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ANALYSIS: With an Obermatt Safety Rank of 100 (better than 100% compared with alternatives) for 2024, the company CME Group has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of CME Group is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for CME Group. Leverage is at 77, meaning the company has a below-average debt-to-equity ratio. It has less debt than 77% of its competitors. Refinancing is at a rank of 77, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 77% of its competitors. Finally, Liquidity is also good at a rank of 94, which means that the company generates more profit to service its debt than 94% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 100 (better than 100% compared with alternatives), CME Group has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: CME Group Below-Average Financial Performance
| COMBINED PERFORMANCE | August 15, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 28 |
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| GROWTH | ||||||||
| GROWTH | 9 |
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| SAFETY | ||||||||
| SAFETY | 94 |
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| COMBINED | ||||||||
| COMBINED | 33 |
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ANALYSIS: With an Obermatt Combined Rank of 33 (worse than 67% compared with investment alternatives), CME Group (Financial Exchanges & Data, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of CME Group are low in value (priced high) with a consolidated Value Rank of 28 (worse than 72% of alternatives) and show below-average growth (Growth Rank of 9) but are safely financed (Safety Rank of 100), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 33, is a hold recommendation based on CME Group's financial characteristics. As the company CME Group's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 28) and low growth (Obermatt Growth Rank of 9), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 100) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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