On September 15, 2026, we present a DCF analysis for CME Group Inc CME, which has shown a price performance of +0.2% over the past week, +4.4% over the past month, +6.2% year-to-date, and +11.1% over the past year. The analysis indicates a consensus across valuation models that CME is significantly overvalued.
- DCF Earnings-based intrinsic value of $194.04 vs current price of $280.46 (margin of safety: -44.5%)
- DCF FCF-based intrinsic value of $184.22, supporting the overvaluation conclusion
- GF Score™ of 84/100 suggests moderate reliability of DCF inputs due to the low predictability rank
What Is CME Worth? DCF Earnings-Based Model
The DCF earnings-based model for CME Group Inc utilizes a two-stage growth approach. In the first stage, we project earnings growth at 10.4% annually for the next ten years, followed by a terminal growth phase at 4% for the subsequent ten years. The discount rate applied is 12%, derived from the risk-free rate and equity risk premium.
| Parameter | Value |
|---|---|
| Current EPS (TTM, excl. non-recurring) | $11.80 |
| 10-Year Growth Rate | 10.4% |
| 10-Year Treasury Rate | 5.01% |
| Discount Rate (ceil(Treasury) + 6%) | 12% |
| Terminal Growth Rate | 4% |
The calculation summary for the two-stage model is as follows:
| Stage | Description | Value |
|---|---|---|
| Growth Stage (Years 1-10) | EPS growing at 10.4%, discounted at 12% | $118.52 |
| Terminal Stage (Years 11-20) | 4% terminal growth, discounted at 12% | $75.52 |
| Intrinsic Value | Growth + Terminal | $194.04 |
With a current price of $280.46 compared to the intrinsic value of $194.04, CME is significantly overvalued, reflecting a margin of safety of -44.5%. It is important to note that GuruFocus uses EPS excluding non-recurring items, as research indicates that stock prices correlate more closely with earnings than with free cash flow. For further analysis, visit the CME DCF Calculator.
What Does the Free Cash Flow DCF Say?
The free cash flow (FCF) based intrinsic value for CME is calculated at $184.22. This value corroborates the earnings-based DCF analysis, both indicating that CME is significantly overvalued with a margin of safety of -52.2%.
How Does GF Value™ Compare to the DCF Models?
The GF Value™ for CME is calculated at $273.02, providing a third perspective on valuation. This proprietary measure from GuruFocus is derived from historical trading multiples, past business growth, and future performance estimates. All three models—DCF earnings, DCF FCF, and GF Value™—agree on the overvaluation of CME.
For more insights, visit the GF Value™ page.
What Does CME's GF Score™ Tell Us?
The GF Score™ measures a stock's overall quality based on various factors, including financial strength, profitability, growth, and valuation. CME's score of 84/100 indicates a solid performance in these areas, but its predictability rank of 2/5 stars suggests that the DCF model may be less reliable for this stock. The following table summarizes CME's scores:
| Metric | Rating |
|---|---|
| GF Score™ | 84/100 |
| Financial Strength | 5/10 |
| Profitability | 8/10 |
| Growth | 9/10 |
| Valuation | 9/10 |
| Momentum | 3/10 |
For additional details, visit the CME stock page.
Key Assumptions and Limitations
It is important to note that DCF models are highly sensitive to assumptions regarding growth rates and discount rates. Stocks with low predictability ratings, such as CME's 2/5 stars, yield less reliable DCF estimates. Additionally, the terminal growth rate of 4% is a simplifying assumption that may not reflect future realities.
What This Means for Investors
In conclusion, all three valuation models—DCF earnings, DCF FCF, and GF Value™—indicate that CME Group Inc is significantly overvalued. The consensus across these models, coupled with the insider activity showing net selling of $30.7M over the past year and the current holdings of 19 gurus (with 12 adding and 4 trimming positions), reinforces this valuation stance. Investors should proceed with caution, considering both the quantitative and qualitative factors at play. For further exploration of CME's valuation, check out the CME DCF Calculator.
Frequently Asked Questions
What is CME's intrinsic value based on DCF?
Answer: earnings-based $194.04, FCF-based $184.22
Is CME overvalued or undervalued?
Answer: CME is overvalued based on both DCF and GF Value™ consensus.
How reliable is the DCF model for CME?
Answer: The DCF model's reliability is limited due to a predictability rank of 2/5.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
