• If you are wondering whether CME Group at around US$319.50 is still offering value after its recent run, this article walks through what the current price might be implying about the business.
• The stock has posted returns of 3.7% over the past week, 11.7% over the last 30 days, 18.5% year to date and 28.3% over the past year, with a 3 year return of 92.8% and 5 year return of 80.5%.
• Recent coverage has focused on CME Group's role as a major exchange operator and its position in global derivatives markets. This helps frame how investors think about its long term relevance and risk profile, and provides important context when you look at how the share price has been tracking compared to peers and broader financials.
• Even so, CME Group currently scores just 1 out of 6 on our valuation checks. We will first look at what traditional valuation tools say, then finish by showing you a more holistic way to think about what the market might be pricing in.

CME Group scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: CME Group Excess Returns Analysis

The Excess Returns model looks at how much profit a company is expected to generate above the return that equity investors typically require, then links that back to the value of its equity today.

For CME Group, the model starts with an estimated book value of $79.88 per share and a stable earnings figure of $13.74 per share, based on weighted future Return on Equity estimates from 5 analysts. The average Return on Equity input is 15.54%, suggesting the business is expected to earn more on its equity base than the return investors require.

The cost of equity is set at $6.94 per share, which leads to an estimated excess return of $6.80 per share. The analysis also uses a stable book value estimate of $88.43 per share, sourced from weighted future Book Value estimates from 3 analysts. Putting these pieces together, the model arrives at an intrinsic value of about $241.69 per share.

Against a recent share price around $319.50, this implies CME Group is roughly 32.2% overvalued on this approach.

Result: OVERVALUED

Our Excess Returns analysis suggests CME Group may be overvalued by 32.2%. Discover 46 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: CME Group Price vs Earnings

For profitable companies like CME Group, the P/E ratio is a useful yardstick because it links what you are paying per share to the earnings the business is currently generating. It gives you a quick sense of how much the market is willing to pay for each dollar of profit.

A “normal” or “fair” P/E usually reflects what investors expect for future earnings growth and how much risk they see in those earnings. Higher expected growth or lower perceived risk can support a higher P/E, while lower growth or higher perceived risk tends to support a lower one.

CME Group is trading on a P/E of 28.65x, compared with a Capital Markets industry average P/E of about 22.60x and a peer average around 29.98x. Simply Wall St’s Fair Ratio for CME Group is 15.90x. The Fair Ratio is a proprietary estimate of what P/E might make sense after accounting for factors such as earnings growth, profit margins, industry, market cap and company specific risks, rather than relying only on broad industry or peer comparisons.

Because CME Group’s actual P/E of 28.65x is higher than the Fair Ratio of 15.90x, the stock currently screens as expensive on this multiple based view.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your CME Group Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St's Community page you can use Narratives, where you and other investors link a clear story about CME Group to specific assumptions for future revenue, earnings and margins. You can turn that into a fair value and compare it to the current price to help decide whether to buy or sell. You can also see that fair value update automatically when new information such as earnings or product news arrives. One investor might build a more optimistic CME story closer to the US$313 analyst target, while another might lean toward the more cautious US$212 view. Both versions sit side by side so you can see how different perspectives drive different fair values.

Do you think there's more to the story for CME Group? Head over to our Community to see what others are saying!

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.