Section 1: Company Overview and Fundamentals

1.1 Company Overview:

CME Group Inc. (NASDAQ: CME) provides products across all asset classes, by trading futures, options, cash and over the counter (OTC) products. The Company offers a range of interest rates, equity indexes, foreign exchange (FX), agricultural commodities, energy and metals.

Kalkine’s Diversified Opportunities Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Stock Performance:

• The stock has corrected by 5.39% in the last six months as well as by 2.43% in past nine months.
• The stock is leaning towards the lower band of its 52-week range of USD 223.80 and 52-week low price of USD 177.97, with the current price inside a decent support area of around USD 190-USD 200.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 33.80, recovering from oversold levels.

1.2 The Key Positives, Negatives, and Investment summary  

1.3 Top 10 shareholders:

The top 10 shareholders together form ~35.85% of the total shareholding, signifying diverse shareholding. The Vanguard Group, Inc., and BlackRock Institutional Trust Company, N.A. are the biggest shareholders, holding the maximum stake in the company at ~9.23% and ~5.12%, respectively.

1.4 Key Metrics:

CME Group has demonstrated strong financial growth with a compound annual growth rate (CAGR) of approximately 20.3% from 2018 to 2023, as revenue increased from USD4.3 billion in 2018 to USD10.9 billion in 2023. In the first quarter of FY2024, CME's return on equity (ROE) was an impressive 33.4%, significantly outperforming the industry median of 21.9%. Additionally, CME maintained a robust financial position with a debt/equity ratio of 0.13, well below the industry median of 0.57, highlighting its prudent financial management and stability.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q1FY24:

Section 3: Key Risks & Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• The stock has corrected by 39% in the last six months as well as by 2.43% in past nine months.
• The stock is leaning towards the lower band of its 52-week range of USD 223.80 and 52-week low price of USD 177.97, with the current price inside a decent support area of around USD 190-USD 200.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 33.80, recovering from oversold levels.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is June 18, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.