CME changes

Pick any two versions below to diff them.

FromTo

View the full Nov 9, 2026 version

Price: $304.52
Discount category: Close to intrinsic value
Next earnings: 2027-02-03
Next earnings is estimate: Yes
Company name: CME Group
Sector: Financial exchanges
About: CME Group runs a leading derivatives marketplace with four exchanges: CME, CBOT, NYMEX and COMEX. Clients trade futures and options on interest rates, equity indexes, foreign exchange, energy, agricultural products, metals and cryptocurrencies, mainly on the CME Globex platform. CME Group also runs BrokerTec for U.S. Treasury trading, EBS for foreign exchange trading and CME Clearing, a leading central counterparty clearing house. It owns a share of S&P Dow Jones Indices and an equity interest in FanDuel Prediction Markets. Revenue was a record $6.5 billion in 2025, and clearing and transaction fees gave most of it. Average daily volume was a record 28.1 million contracts in 2025.
Thesis: The market prices CME Group for trading volumes that are at record levels and can fall when markets become calm. Most revenue comes from fees on each contract, so revenue moves with trading activity. Average daily volume was a record 36.2 million contracts in Q1 2026 and 29.4 million in Q3 2026, a record for a third quarter. Investors also watch new competition in futures, cryptocurrency and prediction markets, and the change of chief executive in 2027. For the gap to close, three things must be true. Volume must stay near 2026 levels in 2027, also when markets are calmer. Market data revenue, which grew 20% in Q3 2026, and new products such as U.S. Treasury clearing must keep growing. Costs must stay under control during the move to Google Cloud. The Q4 2026 report, expected in early February 2027, gives the next test. Lynne Fitzpatrick becomes chief executive on March 1, 2027 or later, when the 2026 Form 10-K is filed. If volume holds, the gap can close within about a year. The main reason it may not close is a long period of calm markets, which can lower volume and revenue.
Risks: Revenue depends on trading volume, and volume is highest when markets are volatile. Volume was a record in 2025 and in Q1 2026. A long period of calm markets or stable interest rates can lower volume, revenue and earnings. The Form 10-Q names more competition from new entrants and from the consolidation of other exchanges. New venues for futures, cryptocurrency and prediction markets can take volume or force lower fees. CME Group is moving its technology to Google Cloud. During the move it pays for both systems, and technology costs rose to $80.9 million in Q3 2026 from $71.4 million. A failure or outage of the trading or clearing systems can harm clients and the company. The chief executive and the chief financial officer change in 2027. A new team can change the strategy, costs or capital returns. Regulators can change the rules for futures, clearing and margin. New rules can raise costs for CME Group or for its clients.
Balance sheet: Cash: $2.3B Debt: $3.4B Net debt: $1.1B Interest cover: 26× CME Group has little debt compared with its earnings. Long-term debt was $3.43 billion at September 30, 2026. Cash and cash equivalents were $2.20 billion and marketable securities were $131 million, and the company also had $225 million deposited with the Fixed Income Clearing Corporation. Performance bonds and guaranty fund contributions of $155.2 billion belong to clearing firms, and equal liabilities offset them, so this profile leaves them out. Interest cover is Q3 2026 operating income of $1,141.4 million divided by interest and other borrowing costs of $43.5 million. Shareholders' equity was $26.56 billion, and it included goodwill of $10.5 billion and trading product intangibles of $17.2 billion. The clearing house also has a 364-day secured credit facility of $7 billion for temporary liquidity needs. CME paid regular dividends of $1.30 per share each quarter in 2026 and dividends of $10.05 per share in the first nine months of 2026, which include the annual variable dividend. As of 2026-09-30.
Checkpoints: Oct 21, 2026: Q3 2026 results: volume and revenue. Passed. Watch: Revenue and adjusted EPS above Q3 2025 with strong volume pass; lower revenue or lower volume fail. Outcome: Revenue rose 13% to $1.74 billion and adjusted diluted EPS rose to $3.02 from $2.68, with record third-quarter volume of 29.4 million contracts a day. Feb 3, 2027 (estimate): Q4 2026 results and annual variable dividend. Pending. Watch: Record 2026 revenue and adjusted EPS, steady volume in Q4 and an annual variable dividend at least as large as the last one pass; falling volume or rising costs fail. Mar 2027 (estimate): Lynne Fitzpatrick becomes chief executive. Pending. Watch: A smooth change with no change to the capital return policy passes; a new strategy that lowers returns or raises costs fails.
Recent events: 2026-10-21: CME Group reported Q3 2026 results. Revenue rose 13% to $1.74 billion, a record for a third quarter, and adjusted diluted EPS rose to $3.02 from $2.68. Average daily volume was a third-quarter record of 29.4 million contracts, with growth in all six asset classes. Market data revenue rose 20% to a record $243 million. CME returned nearly $1 billion in the quarter: $465 million in dividends and $524 million in share buybacks. 2026-09-09: CME Group said that Jack Tobin, its chief accounting officer, becomes deputy chief financial officer on November 2, 2026 and chief financial officer in March 2027, when Lynne Fitzpatrick becomes chief executive. Matthew Render becomes chief accounting officer. 2026-07-22: CME Group reported Q2 2026 results. Adjusted diluted EPS was $2.99, and the first half of 2026 was the strongest in the company's history for revenue and adjusted EPS. Market data revenue rose 20% to a record $238 million. 2026-06-17: CME Group said that Terry Duffy, chairman and chief executive, becomes executive chairman until December 31, 2027. Lynne Fitzpatrick, president and chief financial officer, becomes chief executive on the later of March 1, 2027 and the filing date of the 2026 Form 10-K. 2026-03-05: All 4,584,000 preferred shares of CME Group converted to Class A common stock. 2026-02-04: CME Group reported 2025 results, its fourth year in a row of record revenue and adjusted EPS. Revenue rose 6% to $6.5 billion, adjusted diluted EPS was $11.20 and average daily volume was a record 28.1 million contracts. The company paid dividends of about $3.9 billion in 2025.