CME Group (CME) has pushed further into digital assets by launching Bitcoin Volatility Index futures and switching its cryptocurrency futures and options to 24/7 trading, after recording active first trades and measurable contract volumes.

The recent crypto product launches come as CME’s share price has rebounded in the very short term, with a 1-day share price return of 3.07% and a 7-day share price return of 4.42%. However, the 90-day share price return is down 15.23% and the 1-year total shareholder return is 1.64%, suggesting that shorter term momentum has picked up while longer term returns have been steadier.

If you are interested in how other exchanges and trading platforms are involved in digital assets, it may be worth scanning the market using our cryptocurrency focused screener to find 20 cryptocurrency and blockchain stocks.

So, with CME Group’s shares rebounding in the very short term but 90-day returns still down, and with the stock trading below analyst price targets yet above some intrinsic estimates, is there a genuine opening here, or is the market already pricing in future growth?

Most Popular Narrative: 13.9% Undervalued

At a last close of $263.80 versus a narrative fair value of about $306.47, the current price sits below what this widely followed model implies.

New product innovations (e.g., Micro contracts, expansion into crypto, FX Spot+), ongoing tech-driven operating efficiencies (cloud migration and tokenization initiatives), and strengthening of strategic partnerships (such as the long-term NASDAQ index license extension and Google Cloud collaboration) are enhancing operating leverage and EBITDA/net margin performance.

Want to see the math behind that gap? The narrative leans heavily on steady revenue expansion, high margins and a richer earnings multiple baked into the model.

Result: Fair Value of $306.47 (UNDERVALUED)

However, this depends on volatility and competition. Calmer markets or growing DeFi and perpetual futures rivals could pressure trading volumes, fees, and margins.

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Another View: Cash Flows Paint A Tighter Picture

While the popular narrative model points to a fair value of about $306.47 and labels CME Group as undervalued, our DCF model is more cautious. On a future cash flow basis, the shares sit above an estimated value of $250.09, which suggests less of a clear discount and more of a debate about how much growth is already reflected in the price.

For a closer look at how this cash flow view is built, Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out CME Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 48 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Curious whether the recent pricing signals align with the underlying story of CME Group’s risks and rewards? Act now by reviewing the 2 key rewards and 2 important warning signs.

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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.