Intrinsic value of CME Group Cl A - CME

Previous Close

$139.49

  Intrinsic Value

$105.79

stock screener

  Rating & Target

sell

-24%

Previous close

$139.49

 
Intrinsic value

$105.79

 
Up/down potential

-24%

 
Rating

sell

Our model is not good at valuating stocks of financial companies, such as CME.

We calculate the intrinsic value of CME stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 47.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.06
  2.10
  2.39
  2.65
  2.89
  3.10
  3.29
  3.46
  3.61
  3.75
  3.88
  3.99
  4.09
  4.18
  4.26
  4.34
  4.40
  4.46
  4.52
  4.56
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
Revenue, $m
  3,595
  3,670
  3,758
  3,858
  3,969
  4,092
  4,227
  4,373
  4,531
  4,701
  4,883
  5,078
  5,285
  5,506
  5,741
  5,990
  6,254
  6,533
  6,828
  7,140
  7,469
  7,816
  8,182
  8,568
  8,974
  9,402
  9,852
  10,327
  10,825
  11,350
  11,902
Variable operating expenses, $m
 
  737
  736
  736
  735
  734
  733
  733
  732
  731
  730
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -40
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -57
  -60
  -63
  -66
Fixed operating expenses, $m
 
  688
  705
  723
  741
  759
  778
  798
  818
  838
  859
  880
  902
  925
  948
  972
  996
  1,021
  1,047
  1,073
  1,100
  1,127
  1,155
  1,184
  1,214
  1,244
  1,275
  1,307
  1,340
  1,373
  1,407
Total operating expenses, $m
  1,393
  1,425
  1,441
  1,459
  1,476
  1,493
  1,511
  1,531
  1,550
  1,569
  1,589
  852
  873
  894
  916
  939
  961
  985
  1,009
  1,033
  1,059
  1,084
  1,110
  1,137
  1,164
  1,192
  1,220
  1,250
  1,280
  1,310
  1,341
Operating income, $m
  2,203
  2,246
  2,317
  2,400
  2,494
  2,599
  2,715
  2,843
  2,981
  3,132
  3,294
  4,226
  4,412
  4,612
  4,825
  5,052
  5,292
  5,548
  5,819
  6,107
  6,411
  6,732
  7,072
  7,431
  7,810
  8,210
  8,632
  9,077
  9,546
  10,040
  10,561
EBITDA, $m
  2,428
  3,688
  3,775
  3,876
  3,991
  4,119
  4,260
  4,415
  4,584
  4,766
  4,962
  5,173
  5,398
  5,639
  5,896
  6,169
  6,459
  6,767
  7,093
  7,439
  7,804
  8,190
  8,599
  9,029
  9,484
  9,964
  10,470
  11,003
  11,566
  12,158
  12,781
Interest expense (income), $m
  85
  85
  135
  181
  233
  291
  355
  425
  501
  583
  672
  767
  869
  977
  1,092
  1,214
  1,344
  1,482
  1,627
  1,781
  1,943
  2,115
  2,296
  2,486
  2,688
  2,899
  3,122
  3,357
  3,604
  3,864
  4,138
Earnings before tax, $m
  2,288
  2,161
  2,182
  2,219
  2,261
  2,308
  2,360
  2,418
  2,480
  2,549
  2,622
  3,459
  3,544
  3,635
  3,733
  3,837
  3,948
  4,067
  4,192
  4,326
  4,467
  4,617
  4,776
  4,945
  5,123
  5,311
  5,510
  5,720
  5,941
  6,176
  6,423
Tax expense, $m
  754
  584
  589
  599
  610
  623
  637
  653
  670
  688
  708
  934
  957
  982
  1,008
  1,036
  1,066
  1,098
  1,132
  1,168
  1,206
  1,247
  1,290
  1,335
  1,383
  1,434
  1,488
  1,544
  1,604
  1,667
  1,734
Net income, $m
  1,534
  1,578
  1,593
  1,620
  1,651
  1,685
  1,723
  1,765
  1,811
  1,860
  1,914
  2,525
  2,587
  2,654
  2,725
  2,801
  2,882
  2,969
  3,060
  3,158
  3,261
  3,371
  3,487
  3,610
  3,739
  3,877
  4,022
  4,175
  4,337
  4,508
  4,689

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,952
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  69,369
  69,255
  70,910
  72,790
  74,890
  77,210
  79,748
  82,507
  85,487
  88,695
  92,133
  95,808
  99,726
  103,896
  108,325
  113,022
  117,999
  123,265
  128,832
  134,712
  140,920
  147,469
  154,375
  161,653
  169,320
  177,394
  185,895
  194,841
  204,255
  214,157
  224,573
Adjusted assets (=assets-cash), $m
  67,417
  69,255
  70,910
  72,790
  74,890
  77,210
  79,748
  82,507
  85,487
  88,695
  92,133
  95,808
  99,726
  103,896
  108,325
  113,022
  117,999
  123,265
  128,832
  134,712
  140,920
  147,469
  154,375
  161,653
  169,320
  177,394
  185,895
  194,841
  204,255
  214,157
  224,573
Revenue / Adjusted assets
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
Average production assets, $m
  20,123
  20,544
  21,035
  21,592
  22,216
  22,904
  23,657
  24,475
  25,359
  26,310
  27,330
  28,421
  29,583
  30,820
  32,134
  33,527
  35,003
  36,565
  38,217
  39,961
  41,803
  43,745
  45,794
  47,953
  50,227
  52,622
  55,144
  57,798
  60,590
  63,528
  66,617
Working capital, $m
  1,086
  -885
  -906
  -930
  -957
  -986
  -1,019
  -1,054
  -1,092
  -1,133
  -1,177
  -1,224
  -1,274
  -1,327
  -1,384
  -1,444
  -1,507
  -1,574
  -1,646
  -1,721
  -1,800
  -1,884
  -1,972
  -2,065
  -2,163
  -2,266
  -2,374
  -2,489
  -2,609
  -2,735
  -2,868
Total debt, $m
  2,231
  3,551
  4,754
  6,121
  7,648
  9,335
  11,180
  13,185
  15,352
  17,684
  20,184
  22,855
  25,704
  28,735
  31,955
  35,370
  38,988
  42,816
  46,864
  51,139
  55,652
  60,413
  65,434
  70,725
  76,299
  82,169
  88,348
  94,853
  101,696
  108,895
  116,467
Total liabilities, $m
  49,029
  50,348
  51,551
  52,918
  54,445
  56,132
  57,977
  59,982
  62,149
  64,481
  66,981
  69,652
  72,501
  75,532
  78,752
  82,167
  85,785
  89,613
  93,661
  97,936
  102,449
  107,210
  112,231
  117,522
  123,096
  128,966
  135,145
  141,650
  148,493
  155,692
  163,264
Total equity, $m
  20,341
  18,907
  19,358
  19,872
  20,445
  21,078
  21,771
  22,524
  23,338
  24,214
  25,152
  26,156
  27,225
  28,364
  29,573
  30,855
  32,214
  33,651
  35,171
  36,776
  38,471
  40,259
  42,144
  44,131
  46,224
  48,429
  50,749
  53,192
  55,762
  58,465
  61,308
Total liabilities and equity, $m
  69,370
  69,255
  70,909
  72,790
  74,890
  77,210
  79,748
  82,506
  85,487
  88,695
  92,133
  95,808
  99,726
  103,896
  108,325
  113,022
  117,999
  123,264
  128,832
  134,712
  140,920
  147,469
  154,375
  161,653
  169,320
  177,395
  185,894
  194,842
  204,255
  214,157
  224,572
Debt-to-equity ratio
  0.110
  0.190
  0.250
  0.310
  0.370
  0.440
  0.510
  0.590
  0.660
  0.730
  0.800
  0.870
  0.940
  1.010
  1.080
  1.150
  1.210
  1.270
  1.330
  1.390
  1.450
  1.500
  1.550
  1.600
  1.650
  1.700
  1.740
  1.780
  1.820
  1.860
  1.900
Adjusted equity ratio
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,534
  1,578
  1,593
  1,620
  1,651
  1,685
  1,723
  1,765
  1,811
  1,860
  1,914
  2,525
  2,587
  2,654
  2,725
  2,801
  2,882
  2,969
  3,060
  3,158
  3,261
  3,371
  3,487
  3,610
  3,739
  3,877
  4,022
  4,175
  4,337
  4,508
  4,689
Depreciation, amort., depletion, $m
  225
  1,442
  1,458
  1,477
  1,497
  1,520
  1,545
  1,573
  1,602
  1,634
  1,668
  947
  986
  1,027
  1,071
  1,118
  1,167
  1,219
  1,274
  1,332
  1,393
  1,458
  1,526
  1,598
  1,674
  1,754
  1,838
  1,927
  2,020
  2,118
  2,221
Funds from operations, $m
  1,713
  3,020
  3,051
  3,097
  3,148
  3,205
  3,268
  3,338
  3,413
  3,494
  3,582
  3,472
  3,573
  3,681
  3,796
  3,919
  4,049
  4,188
  4,334
  4,490
  4,655
  4,829
  5,013
  5,208
  5,414
  5,631
  5,860
  6,102
  6,357
  6,626
  6,909
Change in working capital, $m
  -3
  -18
  -21
  -24
  -27
  -30
  -32
  -35
  -38
  -41
  -44
  -47
  -50
  -53
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -84
  -88
  -93
  -98
  -103
  -109
  -114
  -120
  -126
  -133
Cash from operations, $m
  1,716
  3,038
  3,072
  3,121
  3,175
  3,235
  3,301
  3,373
  3,451
  3,535
  3,626
  3,519
  3,623
  3,734
  3,853
  3,979
  4,113
  4,255
  4,405
  4,565
  4,734
  4,913
  5,101
  5,301
  5,512
  5,734
  5,969
  6,216
  6,477
  6,752
  7,042
Maintenance CAPEX, $m
  0
  -671
  -685
  -701
  -720
  -741
  -763
  -789
  -816
  -845
  -877
  -911
  -947
  -986
  -1,027
  -1,071
  -1,118
  -1,167
  -1,219
  -1,274
  -1,332
  -1,393
  -1,458
  -1,526
  -1,598
  -1,674
  -1,754
  -1,838
  -1,927
  -2,020
  -2,118
New CAPEX, $m
  -92
  -421
  -491
  -558
  -623
  -688
  -753
  -818
  -884
  -951
  -1,020
  -1,090
  -1,162
  -1,237
  -1,314
  -1,393
  -1,476
  -1,562
  -1,651
  -1,744
  -1,842
  -1,943
  -2,048
  -2,159
  -2,274
  -2,395
  -2,522
  -2,654
  -2,792
  -2,938
  -3,090
Cash from investing activities, $m
  54
  -1,092
  -1,176
  -1,259
  -1,343
  -1,429
  -1,516
  -1,607
  -1,700
  -1,796
  -1,897
  -2,001
  -2,109
  -2,223
  -2,341
  -2,464
  -2,594
  -2,729
  -2,870
  -3,018
  -3,174
  -3,336
  -3,506
  -3,685
  -3,872
  -4,069
  -4,276
  -4,492
  -4,719
  -4,958
  -5,208
Free cash flow, $m
  1,770
  1,946
  1,896
  1,862
  1,832
  1,806
  1,784
  1,766
  1,751
  1,739
  1,729
  1,518
  1,513
  1,511
  1,512
  1,514
  1,519
  1,526
  1,535
  1,547
  1,560
  1,576
  1,595
  1,616
  1,639
  1,665
  1,693
  1,724
  1,758
  1,795
  1,835
Issuance/(repayment) of debt, $m
  130
  1,320
  1,203
  1,367
  1,527
  1,686
  1,845
  2,005
  2,167
  2,332
  2,500
  2,672
  2,849
  3,031
  3,220
  3,415
  3,618
  3,828
  4,047
  4,275
  4,513
  4,761
  5,020
  5,291
  5,574
  5,870
  6,180
  6,504
  6,844
  7,199
  7,572
Issuance/(repurchase) of shares, $m
  52
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  193
  1,320
  1,203
  1,367
  1,527
  1,686
  1,845
  2,005
  2,167
  2,332
  2,500
  2,672
  2,849
  3,031
  3,220
  3,415
  3,618
  3,828
  4,047
  4,275
  4,513
  4,761
  5,020
  5,291
  5,574
  5,870
  6,180
  6,504
  6,844
  7,199
  7,572
Total cash flow (excl. dividends), $m
  1,963
  3,266
  3,100
  3,228
  3,359
  3,493
  3,630
  3,771
  3,918
  4,070
  4,229
  4,190
  4,362
  4,543
  4,731
  4,929
  5,137
  5,354
  5,582
  5,822
  6,073
  6,338
  6,615
  6,907
  7,213
  7,535
  7,873
  8,228
  8,602
  8,994
  9,407
Retained Cash Flow (-), $m
  211
  -518
  -452
  -513
  -573
  -633
  -693
  -753
  -814
  -876
  -939
  -1,003
  -1,070
  -1,138
  -1,209
  -1,282
  -1,359
  -1,438
  -1,520
  -1,605
  -1,695
  -1,788
  -1,885
  -1,987
  -2,093
  -2,204
  -2,321
  -2,442
  -2,570
  -2,703
  -2,843
Prev. year cash balance distribution, $m
 
  1,952
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  4,701
  2,648
  2,715
  2,786
  2,859
  2,937
  3,018
  3,104
  3,195
  3,290
  3,186
  3,292
  3,404
  3,522
  3,647
  3,778
  3,917
  4,063
  4,217
  4,379
  4,550
  4,730
  4,920
  5,120
  5,330
  5,552
  5,786
  6,032
  6,291
  6,564
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  4,507
  2,424
  2,363
  2,294
  2,216
  2,131
  2,039
  1,940
  1,835
  1,725
  1,513
  1,405
  1,294
  1,183
  1,071
  960
  852
  748
  649
  556
  471
  392
  322
  261
  207
  162
  124
  93
  69
  49
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

CME Group Inc., through its exchanges, provides products across all asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The Company's segment primarily consists of the Chicago Mercantile Exchange Inc. (CME), Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. (NYMEX) and Commodity Exchange, Inc. (COMEX) exchanges. The Company provides electronic trading around the globe on its CME Globex platform. The Company also offers clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives through its clearinghouses CME Clearing and CME Clearing Europe. It also provides hosting, connectivity and customer support for electronic trading through its co-location services. The Company's CME Direct platform offers side-by-side trading of exchange-listed and privately negotiated markets.

FINANCIAL RATIOS  of  CME Group Cl A (CME)

Valuation Ratios
P/E Ratio 30.8
Price to Sales 13.1
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 27.5
Price to Free Cash Flow 29.1
Growth Rates
Sales Growth Rate 8.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -19.3%
Cap. Spend. - 3 Yr. Gr. Rate -6.1%
Financial Strength
Quick Ratio NaN
Current Ratio 1
LT Debt to Equity 11%
Total Debt to Equity 11%
Interest Coverage 28
Management Effectiveness
Return On Assets 2.3%
Ret/ On Assets - 3 Yr. Avg. 2%
Return On Total Capital 6.8%
Ret/ On T. Cap. - 3 Yr. Avg. 5.7%
Return On Equity 7.5%
Return On Equity - 3 Yr. Avg. 6.3%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 72.3%
EBITDA Margin - 3 Yr. Avg. 69.5%
Operating Margin 61.3%
Oper. Margin - 3 Yr. Avg. 59.3%
Pre-Tax Margin 63.6%
Pre-Tax Margin - 3 Yr. Avg. 59.8%
Net Profit Margin 42.7%
Net Profit Margin - 3 Yr. Avg. 38.8%
Effective Tax Rate 33%
Eff/ Tax Rate - 3 Yr. Avg. 35.2%
Payout Ratio 116.5%

CME stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CME stock intrinsic value calculation we used $3595 million for the last fiscal year's total revenue generated by CME Group Cl A. The default revenue input number comes from 2016 income statement of CME Group Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CME stock valuation model: a) initial revenue growth rate of 2.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for CME is calculated based on our internal credit rating of CME Group Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of CME Group Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CME stock the variable cost ratio is equal to 20.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $671 million in the base year in the intrinsic value calculation for CME stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.8% for CME Group Cl A.

Corporate tax rate of 27% is the nominal tax rate for CME Group Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CME stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CME are equal to 559.7%.

Life of production assets of 123.1 years is the average useful life of capital assets used in CME Group Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CME is equal to -24.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $20341 million for CME Group Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 339.895 million for CME Group Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of CME Group Cl A at the current share price and the inputted number of shares is $47.4 billion.

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▶ [$$] Bitcoin Futures May Be Coming, But an ETF Is No Lock   [Nov-01-17 07:12PM  The Wall Street Journal]
▶ Bitcoin Rally Continues After CME Group's Embrace   [04:45PM  Investor's Business Daily]
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Financial statements of CME
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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