October 3, 2024
Top 10 Stock CME Group Buy 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 S&P 500 Index
CME Group is listed as a top 10 stock on October 03, 2024 in the market index S&P 500 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 61 (high 61% performer), Obermatt assesses an overall buy recommendation for CME Group on October 03, 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 Buy
| 360 METRICS | October 3, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 29 |
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| GROWTH | ||||||||
| GROWTH | 25 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| SENTIMENT | ||||||||
| SENTIMENT | 64 |
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| 360° VIEW | ||||||||
| 360° VIEW | 61 |
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ANALYSIS: With an Obermatt 360° View of 61 (better than 61% compared with alternatives), overall professional sentiment and financial characteristics for the stock CME Group are above 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 64, which means that professional investors are more optimistic about the stock than for 64% 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 29, 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 25. ...read more
RECOMMENDATION: With a consolidated 360° View of 61, CME Group is better positioned than 61% 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 64) 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 64 (better than 64% 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 half of the metrics below and half above average for CME Group. Analyst Opinions are at a rank of 42 (worse than 58% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 91, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in CME Group. More encouragingly, the Professional Investors rank is 61, which means that professional investors hold more stock in this company than in 61% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 49, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 51% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 64 (more positive than 64% compared with investment alternatives), CME Group has a reputation among professional investors that is above-average compared with that of its competitors. The sentiment signals are mixed for CME Group. While analysts and the news channels are negative, there is a change in what analysts think. Above-average institutional investors in this company support them. Sentiment signals remain mixed with analysts and news channels pessimistic, though improving, and professional investors above average. ...read more
Value Strategy: CME Group Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 29 (worse than 71% 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 56% 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 7 which means that the stock price compared with what market professionals expect for future profits is higher than 93% 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 36 which means that the stock price compared with what market professionals expect for future profit levels is higher than 64% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 46 is also low. Compared with invested capital, the stock price is higher than for 54% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 29, 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 low
ANALYSIS: With an Obermatt Growth Rank of 25 (better than 25% compared with alternatives), CME Group shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for CME Group. Only Capital Growth has a good rank of 54, which means that currently professionals expect the company to grow its invested capital more than 34% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 16 which means that currently professionals expect the company to grow less than 84% of its competitors. Profit Growth with a rank of 34 and Stock Returns with a rank of 19 are also low (below 81% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 25, is a hold recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for CME Group is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. ...read more
Safety Strategy: CME Group Debt Financing Safety very solid
| SAFETY METRICS | October 3, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 77 |
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| REFINANCING | ||||||||
| REFINANCING | 77 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 93 |
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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 93, which means that the company generates more profit to service its debt than 93% 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 Above-Average Financial Performance
| COMBINED PERFORMANCE | October 3, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 29 |
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| GROWTH | ||||||||
| GROWTH | 25 |
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| SAFETY | ||||||||
| SAFETY | 93 |
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| COMBINED | ||||||||
| COMBINED | 55 |
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ANALYSIS: With an Obermatt Combined Rank of 55 (better than 55% compared with investment alternatives), CME Group (Financial Exchanges & Data, USA) shares have above-average financial characteristics compared with similar stocks. Shares of CME Group are low in value (priced high) with a consolidated Value Rank of 29 (worse than 71% of alternatives) and show below-average growth (Growth Rank of 25) but are safely financed (Safety Rank of 100), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 55, is a buy 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 29) and low growth (Obermatt Growth Rank of 25), 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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