CME Group Inc., through its subsidiaries, operates contract markets for the trading of futures and options on futures contracts worldwide. It offers a range of products across various asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, and metals, as well as fixed income products.
The company executes trade through its electronic trading platforms, open outcry, and privately negotiated transactions; and provides clearing for exchange-traded contracts and cleared swaps, as well as settlement services.
It also offers transaction lifecycle management services, such as trade and portfolio management, financial resource optimization, analytics, and regulatory reporting. In addition, the company provides a range of market data services, including real-time and historical data services.
It serves professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, governments, and central banks.
The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007.
CME Group Inc. was founded in 1898 and is headquartered in Chicago, Illinois.
CME group has a large presence of exchanges in the U.S. with an almost monopolistic stance in the derivatives markets. Subsidiaries are;
Chicago Mercantile Exchange
Chicago Board of Trade
New York Mercantile Exchange
Commodities Exchange
NEX Group Kansas City
Board of Trade S&P
Dow Jones Indices (27.0% ownership)
Its stock price has enjoyed steady returns YoY with a beta of 0.4 against the SP500.
Revenues
EBITDA
Long-term debt
EV= 81billion $
P/E= 41.2x
Revenues, EBITDA are consistently rising whilst long-term debt is low.
Competitors would be the CBOE, Nasdaq and other exchange-oriented companies, whilst the competitive impact being low as the CME's position is cemented and offers unique products compared to the other exchanges, making them a leader in their field in U.S. financial markets, and the stock poised to move higher.
I would therefore set a target price of 240$ until the years end (2019*)
Profiting strategies on the future developments surrounding the stock are numerous;
1. Purchasing a deep-in-the-money call-options with a strike at 210$, (with an expiry 1-1.5 years in to the future*) would offer substantial leverage. Basically entering a synthetic-long-stock position.
2. Purchasing the stocks themselves.