Is CME Group Inc (CME) overvalued?
On Equity Rank's model estimate, CME trades 42% above its fair value. CME Group Inc (CME) last closed at $305.89; the multi-method model fair value is $215.42.
| Price | Model fair value | Price vs model |
|---|---|---|
| $305.89 | $215.42 | 42% above |
What the answer rests on
- 5 of 11 valuation methods put CME's value above its price and 6 put it below, so the methods disagree.
- To justify today's price, CME's free cash flow would need to grow about 0.5% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 12.2% a year.
- CME trades at 25.3 times its last year's earnings, against a median of 23.5 for 9 profitable Financial Data & Analytics companies.
- Over the past year the price sat below the model fair value on 14% of trading days. The gap ranged from 7% below to 74% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind CME's fair value · What prices assume · Other companies