Vs. the previous report dated 23 Jul 2026 (@ $254.32). Signal unchanged — HOLD / HOLD / HOLD — but the picture improved: price +3.9% to $264.32, the tape has turned from a strong downtrend to 'recovering' (reclaimed the 50-day), and the earnings-event risk cleared once Q2 printed. The name is now one tape-confirmation from a BUY on the two longer horizons.
CME Group runs the world's largest derivatives marketplace — the exchange where futures and options on interest rates, equity indices, energy, agriculture, FX and metals are traded and, crucially, cleared. Its core business is charging a small fee on every contract that changes hands, then guaranteeing settlement through its clearing house. The edge is a near-monopoly in the products it dominates (US Treasury and SOFR rate futures, equity-index futures): once liquidity and open interest pool on one venue, traders cannot easily move — the offsetting position, the margin efficiency and the clearing all live there, a self-reinforcing network. It is exceptionally capital-light — 60%+ operating margins, almost no capital expenditure — and returns nearly all its cash via a regular dividend plus a variable year-end special dividend. For a reader: think of it as a toll booth on the plumbing of global finance — it earns more when markets are volatile and trading is heavy, and it is valued like a quality compounder (on earnings), not like a bank (on book value).
Lifecycle: Mature / Cash Cow. CME is a capital-light exchange operator, not a bank or insurer — scored on exchange economics (operating margin, ROIC, ADV/volume trend, FCF conversion), not bank metrics. P/TBV is meaningless here: tangible book per share is negative (−$3.41) because the balance sheet is dominated by goodwill from the CBOT / NYMEX / NEX acquisitions. The correct lens is earnings and cash return.
| Sub-signal | Value | Read |
|---|---|---|
| Operating margin (TTM) | 65% | Elite; near-monopoly exchange. EBITDA margin ~79%. |
| Revenue trajectory | H1'26 ~+7.6% YoY ($3.59bn) | Q2 single-quarter looked flat (+0.8%) vs a very strong Q2'25 comp + an FMP interest-income classification quirk; the H1 run-rate is the honest read — record rate & index ADV. |
| FCF conversion | ~98% of op cash flow | Almost no capex (capex coverage ~45×). Cash machine. |
| ROE (TTM) | ~15.8% | High on a capital-light base; ROIC well above cost of capital. (ROA optically tiny — clearing-member collateral inflates assets; ignore it here.) |
| Balance sheet | Debt/equity 0.13 | Near-zero net debt; interest coverage ~50×. |
| Cash return | ~4.3% TTM yield | Regular dividend $1.30/qtr maintained (declared 6 Aug, ex 9 Sep; the $1.25→$1.30 raise was Feb 2026) = ~2.0% base, plus a variable year-end special dividend ($6.15 paid Mar 2026) → ~4.3% trailing all-in. |
Steady take-rate; can raise fees within reason.
Open-interest liquidity pool self-reinforces.
Margin offsets + single clearing house lock traders in — trimmed from 95 for FMX (below).
Scale + single clearing house = structurally low unit cost.
Regulatory barriers, benchmark contracts (SOFR, WTI, S&P index futures).
Moat average ≈ 84. All five dimensions genuinely apply to an exchange.
Primary multiple: P/E (capital-light exchange; secondary EV/EBITDA ~18×, FCF yield ~3.1%, cash-return yield ~4.3% incl. the special dividend). P/TBV is not used — tangible book is negative (−$3.41/sh).
| Lens | Reading | Signal |
|---|---|---|
| Anchor (40% wt) | Forward ~20.4× ÷ warranted 18.6× = 1.10× | Fair |
| Sector median (20%) | Exchanges (ICE/NDAQ) ~24–28× fwd; CME ~20× fwd | Slight discount to peers on fwd |
| Own 5-yr decile (15%) | ~20× fwd sits mid-range; price −20% off the $329 high | Mid-decile |
| Clean PEG (10%) | ~20.4× / ~5.25% disciplined growth ≈ 3.9 | Rich vs growth — paying for durability |
| Analyst consensus (15%) | Consensus ~$300 (+13.5%); grades split 15 Buy / 17 Hold / 5 Sell (40.5% bullish) | Upside on target, but dispersed / Hold consensus |
Analyst dispersion (honest read): targets are genuinely split — recent FMP prints cluster ~$311–316 and the FMP median is $316, but Yahoo's panel means only $284 and carries two Strong-Sell votes plus JPMorgan Underweight and BofA Underperform. A defensible consensus is ~$295–305 (+12–15%), with credible bears. Implied-growth read: at $264 on ~$12.9 forward EPS the market embeds roughly the disciplined ~5–6% growth we assume — priced fair for a defensive compounder, not a bargain. Fair band → not STRONG-BUY-eligible, and no valuation entry edge until a pullback toward the mid-$240s.
CME's revenue is a toll on trading activity, so its primary driver is average daily volume (ADV), which is itself driven by market volatility and rate-cycle / policy activity. The secondary driver is float / investment income on clearing-member collateral, which higher-for-longer rates keep elevated. This is not a commodity-leveraged name, so the commodity price-trend overlay does not apply.
| Horizon | Driver state | Read |
|---|---|---|
| Short | Supportive but mean-reverting | Iran/Hormuz re-escalation, the Aug-1 tariff wall and rate-path uncertainty keep rate + energy hedging demand high — but VIX is only ~15.8, so the volatility windfall is muted, not a spike. |
| Medium | Balanced | Fed on hold at 3.63% + 10-Y ~4.63% sustains high float income; but the market prices eventual cuts, which would trim that float income. Net balanced. |
| Long | Structural growth | Secular growth in listed derivatives, new products (crypto, event contracts), OTC-to-cleared migration. |
Amplification eligibility: score 60 sits in the neutral 36–64 band — it does not amplify, and in any case HOLD is never amplified. The driver supports accumulating on a pullback but cannot lift the base HOLD the matrix produces from a Fair valuation and an unconfirmed tape.
CME is not a macro-watchlist name, so it inherits the GICS-Financials → XLF read from the latest macro report (2026-07-30), which now rates XLF Short N / Medium N / Long N — a step down from the prior report's Tailwind. Pressure: Neutral → Neutral stance (conviction 55). Worth flagging the nuance: XLF is bank-heavy, whereas an exchange is a partial volatility beneficiary that behaves differently from lenders in a stagflation-lite regime — so 'Neutral' arguably understates a mild trading-volume tailwind. Either way it does not change the signal: the base is HOLD and HOLD never amplifies.
Source: sector-map → GICS Financials → XLF (N/N/N) · Macro report 2026-07-30
Timing improved materially since the last report but is not yet confirmed. CME carved a V-low at $218 on 28 Jun and has recovered ~21% to $264, reclaiming its 50-day (~$251) and its 20-day; the daily frame has flipped from a strong downtrend to 'recovering' with a resistance breakout, RSI 61 and a positive, rising MACD. But the bounce is unconfirmed: the breakout came on below-average volume (0.74×), the price is still below a declining 200-day ($278.5), and the weekly frame is an outright downtrend with a support breakdown. Monthly MACD histogram is still negative. That is textbook 'recovering, not confirmed' → Neutral, not Improving.
| Frame | Trend | RSI | Read |
|---|---|---|---|
| Monthly | Uptrend (rolling) | 51 | Long-term structure intact; momentum still fading (MACD hist −). |
| Weekly | Downtrend / breakdown | 48 | Below 20/50-wk MAs; the frame that keeps this Neutral not Improving. |
| Daily | Recovering | 61 | Above SMA50 $251 & SMA20 $254; still below SMA200 $278.5. Breakout on light volume. |
| Hourly / 15-min | Weakening / recovering | ~51 | Consolidating just under $270 daily resistance. |
Risk-reward: at $264, upside to the $270 daily resistance is thin (+2%); the next real step is $308. Support: 50-day $251, then $244 / $234; a logical stop sits ~$234 (~2 ATR). Relative strength: a low-beta (0.27) name that held up through the first-July S&P decline — outperforming on 1-month, roughly in line on 3-month after the deep June drawdown. No Technical entry group is yet met (breakout lacks volume; price is mid-range, not at support), which — with a Fair valuation — leaves entry at Wait (§12). The signal is one confirmation from a BUY: a 200-day reclaim / weekly turn would move timing to Improving and flip medium & long to BUY.
| Date | Event | Impact | Forecast | Previous | Relevant? | Why |
|---|---|---|---|---|---|---|
| 2026-08-07 | US Non-Farm Payrolls (Jul) | High | +80k / U-rate 4.2% | +57k | Yes | Financials are macro-sensitive; concurrent with this report — a scheduling-neutral event, not a next-update trigger. |
| 2026-10-28 | CME Group Q3 Earnings | High | EPS ~$2.96e | — | Yes | Next binary print — sets the next-update date; beyond the 14-day window now. |
| Date | Event | Actual | Forecast | Surprise | Impact |
|---|---|---|---|---|---|
| 2026-08-06 | Initial Jobless Claims | 199k | 202k | below (firm labour) | Medium |
| 2026-08-06 | Nonfarm Productivity Q2 | 1.4% | 0.6% | above | Medium |
| 2026-07-31 | Core PCE (Jun) | cooler | — | below | High |
No CME-specific catalyst until the 28 Oct Q3 print. The macro tape is a contested stagflation-lite regime (Fed on hold 3.63%, VIX ~15.8, 10-Y 4.63%, yield curve +0.44) with two CRITICAL geopolitical/policy drivers live (Iran/Hormuz, Aug-1 tariffs) — supportive of hedging volume but not a decisive tailwind. Net macro pressure on the exchange: broadly Neutral.
| Timeframe | Trend | Direction | RSI | MACD | Key S/R | Breakout | Vol |
|---|---|---|---|---|---|---|---|
| Monthly | Uptrend (rolling) | ↗ | 51 | hist − | S 196 / R 257 | Resist. breakout (stale) | 0.16× |
| Weekly | Downtrend | ↘ | 48 | hist − | S 218 / R 288 | Support breakdown | 0.54× |
| Daily | Recovering | ↗ | 61 | hist + | S 244 / R 270 | Resist. breakout | 0.74× |
| Hourly | Weakening | → | 51 | hist + | S 260 / R 270 | Support breakdown | — |
| 15-min | Recovering | ↗ | 52 | hist − | S 261 / R 269 | Resist. breakout | — |
| Confluence: Mixed / improving · MTF Score 52 | |||||||
The daily frame has turned up (recovering, above the 50-day, positive MACD, RSI 61) — a real improvement from the strong-downtrend read of the last report. But the weekly is still an outright downtrend and price remains below a declining 200-day ($278.5), and the daily breakout came on light volume. So confluence is Mixed / improving, not confirmed-bullish. A genuine Technical entry needs a daily reclaim of the 200-day on volume, or a confirmed higher-low pullback into the $244–251 zone. Until one prints, the tape says Neutral.
6-month daily close (Feb–Aug 2026). CME de-rated from the $329 high to a $218 V-low (28 Jun), then recovered ~21% to $264 — back above the 50-day but still below the declining 200-day ($278.5). The recovery is real but unconfirmed.
Sustained elevated volatility (rates + energy + a re-armed geopolitical premium) keeps ADV and float income high; the daily recovery extends through the 200-day, a clean Q3 beat lifts the multiple back toward the exchange peer group (~24×), and price reaches roughly the upper analyst targets. Requires the volatility windfall to persist rather than fade.
The most probable path: a quality compounder grinds higher on ~5–6% earnings growth plus the regular + special-dividend cash return, and the recovery resolves the downtrend by drifting back toward the 200-day / lower-Street targets over 6–12 months. Note this is a mild re-rating toward the Street, NOT an undervaluation call — the disciplined anchor already reads Fair. A steady hold, not a multi-bagger.
Volatility normalises (an Iran/Hormuz de-escalation + a benign rate path) → ADV and float income both fade, earnings growth stalls, and the Fair multiple compresses toward ~17–18×. Layer in FMX taking measurable Treasury-futures share (the competitive trigger) and the moat premium erodes — the recovery fails at the 200-day and price retests the mid-$220s toward the $218 floor.
Forecast: No entry group met → Wait. Two reachable early entries: (1) Technical — a daily reclaim of the 200-day ($278.5) on >1.5× volume, or a confirmed higher low on a pullback into $244–251; forecast Moderate confidence, roughly 2–4 weeks if the recovery holds. (2) Fundamental — a pullback below ~$255 restores a valuation edge; Low-Moderate confidence given the current uptrend. The Catalyst path is dormant until the 28 Oct Q3 print (a clean beat + held guidance would open it). A 200-day reclaim would also flip medium & long from HOLD to BUY.
Forecast: No exit trigger live — and there is no position to protect (Wait). If entered later, the $234 stop sits ~11% below spot; a break there is Unlikely in 4–6 weeks absent a volatility collapse or a broad risk-off.
Buying here means paying a Fair — not cheap — multiple into a recovery the tape has not confirmed (breakout on light volume, still below the 200-day). What you gain immediately: a ~2.0% base + variable special dividend (~4.3% all-in trailing) and elite compounding while you wait, plus the bull optionality if a volatility spike lifts ADV. But the base case is only +5%, so the reward:risk is thin. Read: waiting for a 200-day reclaim (which would also flip medium/long to BUY) or a pullback into the mid-$240s materially improves the deal.
No exit rule is live: no stop hit, no thesis break (FMX still negligible), price is nowhere near the profit-target zone. You would be selling a fairly-valued monopoly compounder at ~$264 below both fair-value estimates and the Street. Read: this is a hold/accumulate-on-weakness zone, not a sell.
Position sizing omitted — no risk budget was specified for this analysis. The Conviction Ladder reads Wait (0 of 3 entry groups met): an elite business at a fair price with a recovering-but-unconfirmed tape — no entry edge yet.
{
"ticker": "CME",
"company": "CME Group Inc.",
"date": "2026-08-07",
"version": "v6",
"brand": "",
"exchange": "NASDAQ",
"exchange_ticker": "NASDAQ:CME",
"isin": "US12572Q1058",
"api_ticker": "CME",
"currency": "USD",
"sector": "Financials",
"sub_industry": "Capital Markets / Exchange",
"lifecycle_stage": "mature",
"analysis_status": "on-going",
"finder_ticker": "CME",
"finder_exchange": "\ud83c\uddfa\ud83c\uddf8 NASDAQ",
"price_at_rating": 264.32,
"signal_short": "HOLD",
"signal_medium": "HOLD",
"signal_long": "HOLD",
"primary_signal": "HOLD",
"short_hold_reason": "full_hold",
"quality_score": 82,
"valuation_score": 53,
"timing_score": 53,
"driver_score": 60,
"overall_confidence": 62,
"quality_detail": {
"industry_benchmark_name": "Exchange operating leverage",
"industry_benchmark_value": "op margin 65% + FCF conv 98%",
"industry_benchmark_score": 88,
"moat_score": 84,
"roic_percentile_vs_peers": 85,
"capital_allocation": 82,
"management_skin_in_game": 60
},
"valuation_detail": {
"fcf_yield": 3.1,
"implied_growth_rate": 5.5,
"consensus_growth_rate": 7.0,
"historical_valuation_decile": 5,
"forward_pe": 20.4,
"trailing_pe": 22.5
},
"timing_detail": {
"mtf_confluence": 52,
"risk_reward_score": 48,
"relative_strength_vs_spy": 2.0,
"relative_strength_vs_sector": 0.5,
"catalyst_clustering_score": 75,
"dynamic_macro_weight": 0.2
},
"economic_alignment_stance": "Neutral",
"economic_alignment_conviction": 55,
"economic_alignment_pressure": "Neutral",
"economic_alignment_source": "sector-map \u2192 GICS Financials \u2192 XLF (N/N/N)",
"macro_report_date": "2026-07-30",
"val_multiple_basis": "clean forward P/E (NTM ~12.9; S&P DJI JV earnings recurring, no MtM distortion)",
"warranted_multiple": 18.6,
"actual_multiple": 20.4,
"warranted_ratio": 1.1,
"val_band": "fair",
"sector_guardrail_multiple": 30,
"discount_rate_r": 9.1,
"risk_free_10y": 4.63,
"g_near": 5.25,
"g_term": 3,
"dividend_yield": 4.3,
"trailing_pe": 22.5,
"forward_pe": 20.4,
"fwd_eps_2026e": 12.25,
"nonop_pct_of_net_income": 18,
"clean_pe": 22.5,
"clean_peg": 3.9,
"competitive_share_trajectory": "stable",
"competitive_threat_level": "moderate",
"driver_commodity_trend": null,
"hard_gate_state": "clear",
"gates_triggered": [],
"gates_caution": [],
"do_not_buy_triggers": [],
"entry_groups_met": 0,
"entry_conviction": "Wait",
"exit_groups_live": 0,
"exit_action": "Hold",
"short_entry_confirmed": false,
"short_cap_reason": "Short base is HOLD (High Quality + Fair valuation + Neutral timing); no Technical/Catalyst entry group met (breakout on light volume, price mid-range, below 200-DMA) \u2192 Wait. Quality-starter override does not fire because medium & long are also HOLD. Buy on confirmation: a 200-day reclaim ($278.5) on volume OR a pullback into $244\u2013251.",
"fair_value_est": 255.0,
"stop_loss": 234.0,
"target_price": 278.0,
"scenario_base_target": 278,
"scenario_bull_target": 315,
"scenario_bear_target": 228,
"analyst_consensus_target": 300.0,
"analyst_target_high": 330,
"analyst_target_low": 230,
"analyst_target_upside_pct": 13.5,
"analyst_grades_consensus": "Hold",
"analyst_bullish_pct": 40.5,
"analyst_coverage_count": 37,
"fmp_rating": "B+",
"fmp_overall_score": 3,
"recent_upgrades_30d": 0,
"recent_downgrades_30d": 0,
"next_update_date": "2026-08-21",
"next_update_basis": "default +14d (next earnings 2026-10-28 beyond window)",
"next_check_date": "2026-08-21"
}
Due-refresh (was due 6 Aug). No signal change — HOLD across all three horizons. The decision matrix returns 'High Quality + Fair Valuation + Neutral timing → HOLD' at every horizon; the short-quality-starter override does NOT fire because medium & long are themselves HOLD (not BUY). Since the prior report: price +3.9% to $264.32, timing +6 to 53 (reclaimed the 50-day, daily now 'recovering'), the earnings-event caution cleared (Q2 reported 22 Jul), and Economic Alignment stepped down Tailwind→Neutral (macro moved XLF to N/N/N). The name is one tape-confirmation (a 200-day reclaim / weekly turn) away from flipping medium & long to BUY. No live Short BUY, so it earns no Portfolio-Watchlist tile.