Headquartered in Chicago, Illinois, CME Group Inc. (CME) is a major player in derivatives trading and risk management. Boasting a market cap of $82.8 billion, CME Group operates the world's largest financial derivatives exchange, providing essential tools for businesses and investors to manage risks across a wide range of asset classes, including commodities, currencies, and interest rates.

Shares of CME Group have underperformed the broader market considerably over the past year. CME stock returned 7.6% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 30.1%. In 2024, CME stock is up 8.3%, while SPX is up 24.1% on a YTD basis.

Zooming in further, CME has lagged behind the iShares U.S. Broker-Dealers & Securities Exchanges ETF's (IAI) 55% returns over the past 52 weeks and 37.9% on a YTD basis.

CME Group has underperformed the broader market and peers due to concerns over declining trading volumes, rising market competition, regulatory risks, and potential challenges to future trading growth amid broader economic uncertainties. However, CME Group's shares gained slightly following the release of its Q3 earnings on Oct. 23. The company reported adjusted EPS of $2.68, representing a robust 19.1% year-over-year increase and exceeding analyst expectations of $2.65. Revenue also impressed, coming in at $1.58 billion, up 18.4% year-over-year and slightly above consensus estimates of $1.57 billion.

For the current fiscal year, ending in December, analysts expect CME’s EPS to grow 9.4% to $10.22 on a diluted basis. The company’s earnings surprise history is robust. It beat the consensus estimate in each of the last four quarters.

Among the 17 analysts covering CME stock, the consensus is a “Moderate Buy.” That’s based on six “Strong Buy” ratings, eight “Holds,” one “Moderate Sell,” and two “Strong Sells.”

This configuration is less bullish than three months ago when seven analysts suggested a "Strong Buy." 

On Nov. 11, Deutsche Bank (DB) lowered CME Group's price target slightly to $226 from $227, maintaining a “Hold” rating, citing a mixed macro-outlook with potential for increased market activity but inflationary risks that could limit interest rate cuts.

The mean price target of $236.50 represents a 3.7% premium to CME’s current price levels. The Street-high price target of $275 suggests an upside potential of 20.6%.