Tags: CME | Group | growth | CME

CME Group Aiming for Commodities Growth in Emerging Markets

By    |   Wednesday, 06 June 2012 11:20 AM EDT

CME Group (CME) is one of the centers of the globalized trading world, focused on providing liquidity for a range of commodities and commodity-like products. Analysts believe that the market platform is in a good position to expand in the years to come, and the company is specifically aiming at emerging markets to capture that growth.

CME Group offers a range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate.

Products include both exchange traded and over-the-counter derivatives. CME brings buyers and sellers together through its CME Globex electronic trading platform across the globe and at open-outcry trading facilities in Chicago and New York City and provides hosting, connectivity and customer support for electronic trading through co-location services.

The company also provides clearing and settlement services for exchange-traded contracts, as well as for cleared over-the-counter derivatives transactions. In addition, it offers a wide range of market data services, including live quotes, delayed quotes, market reports and a comprehensive historical data service and has expanded into the index services business through CME Group Index Services.

“Our goal is to continue to expand and diversify our customer base worldwide and offer customers around the world the most broadly diversified portfolio of benchmark products,” CME management said in a recent filing.

“We believe that we have significant opportunity to expand the participation of our non-U.S. customer base in our markets. We are focusing on core growth in global markets because we believe that Asia, Latin America, and other emerging markets will experience superior economic and financial markets growth over the next decade compared with the more mature North American and European markets.”

CME Group has a market cap of $17.82 billion in a sector, diversified financial services, where the average company size is $5.56 billion. Its trailing 12-month P/E ratio is 11 and its five-year projected price-to-earnings-growth (PEG) ratio is 1.07.

Its projected earnings per share growth for the coming year is 15.6 percent, compared to a sector average of 29.12 percent.

Strong franchise

Analysts are generally positive, with buy or outperform calls from Sandler O’Neill, Stifel Nicolaus, UBS, Citigroup Investment Research, Standard & Poor’s, and Jefferies.

“We think CME has a strong franchise in the commodities and futures contracts markets, with transparency to its current condition and planned initiatives,” S&P analysts said in a recent report on CME shares.

“With over $21 billion in shareholders' equity, a 9 percent debt to total capital ratio, and $1 billion in cash and cash equivalents as of March 31, CME is well positioned to invest and gain market share, in our view.”

CME Group next reports on July 26.

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Wednesday, 06 June 2012 11:20 AM
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