CME Group (NYSE:CM) stock is up 5.1% year to date, surpassing the 3.3% advance in the industry. During the specified time period, the Finance sector fell by 1.6%. With a market capitalization of $63.6 billion, the average number of shares exchanged during the last three months was around 1.5 million.

This securities and exchange company is driven by its global footprint, strong product portfolio, focus on over-the-counter clearing services and good financial position.

In the last ten reported quarters, this largest futures exchange in the world in terms of trading volume and notional value exchanged has a great track record of providing earnings surprises. Its earnings have increased by 8.2% during the last five years.

CME Group‘s trailing 12-month ROE was 10.9%, higher than the industry average of 10.8%.

Can It Keep the Bull Run Going?

The Consensus Estimate for 2023 earnings is $8.73, representing a 9.5% year-over-year increase on $5.4 billion in higher revenues. The consensus forecast for 2024 is $8.86, representing a 1.5% year-over-year increase on $5.5 billion in higher revenues. The long-term earnings growth rate is predicted to be 4.7%.

CME Group has a strong market presence, accounting for 90% of worldwide futures trading and clearing services. Increasing electronic trading volume offers scalability and, as a result, leverage to CME Group’s business model.

Because of the heightened volatility, the trading volume should continue to boost clearing and transaction fees. Increased acceptance of a broader range of crypto assets, as well as increased interest across the entire crypto economy, should contribute to the upward trend.

Increased non-transactional revenue should also help the bottom line.

CME Group has a strong balance sheet and financial flexibility, which allows it to pursue strategic growth initiatives such as organic market data expansion and new product extensions and services. Prudent capital allocation continues to increase the value of shareholders.

CME Group has a strong dividend history, increasing payments at an 8% CAGR (2019-2023). The dividend yield is 2.5%, which is higher than the industry average of 1.8%, making the company appealing to yield-seeking investors. Furthermore, CME Group pays five dividends every year, with the fifth being flexible and based on excess cash flow.

In the last 30 days, the consensus estimate for 2023 and 2024 earnings has increased by 0.6% and 0.1%, respectively, indicating analyst optimism.

CME stock is trading at a price-to-earnings multiple of 20.1, which is lower than the industry average of 22.9. Given the stock’s good fundamentals, it is advantageous to add a stake before the valuation expands.

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