If you are eyeing CME Group stock and wondering whether now is the right time to buy, hold, or maybe wait on the sidelines, you are not alone. Over the past few years, CME has treated its long-term shareholders to a remarkable journey, boasting a 100.4% return over the past five years. Even zooming in, the ride has stayed exciting, with a 15.1% return so far this year and 22.6% over the last twelve months. Some investors might notice the dip of 1.3% in the past week, raising questions about whether new developments such as the company’s plan to launch sports contracts by the end of the year are already baked into the price or are hinting at shifting risk perceptions in the market.
Of course, price action is only half the story. Analysts have recently adjusted their expectations; UBS even trimmed its price target slightly, despite raising estimates, reflecting a bit more caution about future outlook. Meanwhile, CME’s latest venture into sports contracts could open fresh revenue streams, especially as it wades deeper into prediction markets alongside big names in the industry. With competitors watching closely and industry partnerships evolving, the question is not just whether CME Group’s stock can keep climbing, but whether its current valuation really stacks up against its prospects.
When we run CME Group through our 6-factor valuation check, it scores a 1 out of 6 for being undervalued, so not a screaming bargain at first glance. But before jumping to conclusions, let’s break down what those valuation measures really mean and see if there is a more insightful way to judge what CME is worth in today’s market.
CME Group scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Excess Returns valuation approach examines how well a company generates returns above its cost of equity. Instead of focusing simply on earnings or cash flows, it measures the value created over and above what shareholders expect as a return for their capital. For CME Group, recent analyst estimates suggest its book value stands at $77.13 per share, while its expected stable earnings per share are $12.28, based on a weighted average of future Return on Equity projections from eight analysts.
With a cost of equity set at $6.41 per share, CME achieves an excess return of $5.87 per share. This translates to an impressive average Return on Equity of 15.56%. The model also references a stable book value projection of $78.88 per share, built from assessments by five different analysts. These figures together inform a valuation model designed to capture the company’s ability to unlock value well into the future, rather than reflecting just short-term profits.
Taking these key indicators into account, the Excess Returns model calculates an intrinsic value for CME Group that is 37.1% below the current share price. This suggests the stock is substantially overvalued by this measure.
Result: OVERVALUED
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for CME Group.
CME Discounted Cash Flow as at Oct 2025
Our Excess Returns analysis suggests CME Group may be overvalued by 37.1%. Find undervalued stocks or create your own screener to find better value opportunities.
For established, profitable companies like CME Group, the Price-to-Earnings (PE) ratio is widely considered one of the most reliable valuation methods. It captures how much investors are willing to pay for each dollar of current earnings, offering a straightforward gauge of market sentiment around profitability and future growth prospects.
The appropriate or “fair” PE ratio is not a one-size-fits-all number. It shifts based on factors such as expected earnings growth, perceived risks, and broader industry trends. Higher growth and stability often warrant a higher PE, while risk and competitive pressures can bring it lower.
Currently, CME Group trades at a PE ratio of 25.9x. That places it exactly in line with the broader capital markets industry average of 25.9x, but well below the average of its peer group, which sits at 33.8x. On the surface, this might suggest a reasonable or even conservative valuation compared to peers.
However, Simply Wall St’s “Fair Ratio” offers a deeper perspective by factoring in CME’s unique attributes, including its earnings quality, growth forecast, profit margins, its market cap, and the risks specific to this business. Unlike a simple industry or peer comparison, the Fair Ratio captures a more nuanced base case for what multiple a business should trade at in light of all these realities. For CME, the Fair Ratio currently stands at 17.7x, meaning its market price is well above what these fundamentals suggest is justified.
Comparing the Fair Ratio of 17.7x to the current PE of 25.9x, CME Group’s stock is trading at a significant premium, indicating it is overvalued on this basis.
Result: OVERVALUED
NasdaqGS:CME PE Ratio as at Oct 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story behind the numbers—your personal perspective about where CME Group is headed, expressed through your own fair value and estimates for future revenue, earnings, and profit margins.
Rather than just relying on historic figures or generic multiples, Narratives link your outlook on the company and its industry to an actual financial forecast. From there, you arrive at a Fair Value that reflects your unique view. Narratives are easy to create and explore on Simply Wall St’s platform within the Community page, where millions of investors together bring diverse insights and evolving perspectives.
By setting your own Narrative, you can instantly see how your fair value compares to the current price, helping you decide if it is time to buy, sell, or hold. Narratives refresh dynamically as new news or results come in, so you are always working with up-to-date information.
For example, some investors using Narratives see CME Group fairly valued as high as $313, citing strong international expansion and retail growth. Others set targets as low as $212, factoring in competition and technology risks.
Do you think there’s more to the story for CME Group? Create your own Narrative to let the Community know!
NasdaqGS:CME Community Fair Values as at Oct 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include CME.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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Contrary to widespread fears about the economic outlook, key credit indicators are turning more bullish. Default rates for high yield debt and loans have peaked, along with delinquency rates for auto loans and credit cards, see charts below.
Three factors explain why corporate default and consumer delinquency rates are moving lower:
1) Uncertainty related to the trade war is significantly lower than its peak during Liberation Day.
2) The ongoing AI boom is boosting the buildout of data centers and related energy infrastructure. Simultaneously, higher stock prices are supporting consumer spending.
3) Investors are increasingly recognizing that we are in the early stages of an industrial renaissance across sectors like aerospace, defense, manufacturing, biotech and technology/automation.
In summary, while the trade war remains a mild drag on growth, its impact is being more than offset by the tailwinds from the AI boom and the industrial renaissance. Consequently, there is a growing upside risk that economic growth will reaccelerate over the coming quarters.
Sources: Moody’s Analytics, Apollo Chief EconomistSources: Federal Reserve Bank of New York, Macrobond, Apollo Chief EconomistSources: Federal Reserve Bank of New York, Macrobond, Apollo Chief Economist
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Max Verstappen secured pole position for the United States Grand Prix, backing up his lights-to-flag victory in the Sprint, despite a timing error from Red Bull denying him a second timed effort in Q3.
