Intrinsic value of CME Group Inc. - CME

Previous Close

$213.58

  Intrinsic Value

$17.80

stock screener

  Rating & Target

str. sell

-92%

Previous close

$213.58

 
Intrinsic value

$17.80

 
Up/down potential

-92%

 
Rating

str. 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 0001), $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 76.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  37.40
  34.16
  31.24
  28.62
  26.26
  24.13
  22.22
  20.50
  18.95
  17.55
  16.30
  15.17
  14.15
  13.24
  12.41
  11.67
  11.00
  10.40
  9.86
  9.38
  8.94
  8.55
  8.19
  7.87
  7.58
  7.33
  7.09
  6.88
  6.70
  6.53
Revenue, $m
  5,921
  7,943
  10,425
  13,408
  16,929
  21,014
  25,683
  30,948
  36,811
  43,273
  50,325
  57,958
  66,159
  74,916
  84,214
  94,043
  104,391
  115,252
  126,619
  138,492
  150,871
  163,764
  177,177
  191,124
  205,619
  220,683
  236,337
  252,606
  269,520
  287,109
Variable operating expenses, $m
  2,150
  2,869
  3,752
  4,813
  6,065
  7,517
  9,177
  11,049
  13,134
  15,432
  17,894
  20,609
  23,525
  26,639
  29,945
  33,440
  37,119
  40,981
  45,023
  49,245
  53,647
  58,231
  63,001
  67,960
  73,114
  78,470
  84,037
  89,822
  95,836
  102,090
Fixed operating expenses, $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
Total operating expenses, $m
  2,150
  2,869
  3,752
  4,813
  6,065
  7,517
  9,177
  11,049
  13,134
  15,432
  17,894
  20,609
  23,525
  26,639
  29,945
  33,440
  37,119
  40,981
  45,023
  49,245
  53,647
  58,231
  63,001
  67,960
  73,114
  78,470
  84,037
  89,822
  95,836
  102,090
Operating income, $m
  3,770
  5,074
  6,673
  8,596
  10,864
  13,497
  16,506
  19,898
  23,677
  27,841
  32,430
  37,349
  42,634
  48,277
  54,269
  60,603
  67,272
  74,270
  81,596
  89,247
  97,225
  105,533
  114,176
  123,164
  132,505
  142,213
  152,300
  162,785
  173,684
  185,019
EBITDA, $m
  4,528
  6,075
  7,973
  10,255
  12,948
  16,073
  19,644
  23,670
  28,155
  33,097
  38,491
  44,329
  50,602
  57,300
  64,412
  71,929
  79,844
  88,151
  96,845
  105,926
  115,395
  125,255
  135,514
  146,182
  157,269
  168,790
  180,763
  193,207
  206,143
  219,596
Interest expense (income), $m
  85
  2,368
  2,609
  2,911
  3,281
  3,726
  4,252
  4,861
  5,558
  6,344
  7,218
  8,183
  9,235
  10,374
  11,597
  12,904
  14,291
  15,758
  17,302
  18,923
  20,619
  22,390
  24,237
  26,161
  28,162
  30,243
  32,406
  34,654
  36,990
  39,417
  41,941
Earnings before tax, $m
  1,402
  2,465
  3,762
  5,314
  7,138
  9,245
  11,645
  14,340
  17,334
  20,622
  24,248
  28,114
  32,261
  36,680
  41,365
  46,312
  51,514
  56,968
  62,673
  68,628
  74,834
  81,295
  88,015
  95,001
  102,262
  109,806
  117,646
  125,795
  134,267
  143,078
Tax expense, $m
  379
  665
  1,016
  1,435
  1,927
  2,496
  3,144
  3,872
  4,680
  5,568
  6,547
  7,591
  8,710
  9,904
  11,169
  12,504
  13,909
  15,381
  16,922
  18,530
  20,205
  21,950
  23,764
  25,650
  27,611
  29,648
  31,764
  33,965
  36,252
  38,631
Net income, $m
  1,024
  1,799
  2,746
  3,879
  5,211
  6,749
  8,501
  10,468
  12,653
  15,054
  17,701
  20,523
  23,550
  26,776
  30,197
  33,808
  37,605
  41,587
  45,751
  50,099
  54,629
  59,345
  64,251
  69,351
  74,651
  80,158
  85,882
  91,830
  98,015
  104,447

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  51,935
  69,676
  91,445
  117,616
  148,500
  184,336
  225,292
  271,470
  322,906
  379,584
  441,445
  508,401
  580,344
  657,156
  738,723
  824,938
  915,713
  1,010,978
  1,110,692
  1,214,838
  1,323,434
  1,436,524
  1,554,184
  1,676,523
  1,803,678
  1,935,815
  2,073,130
  2,215,846
  2,364,211
  2,518,501
Adjusted assets (=assets-cash), $m
  51,935
  69,676
  91,445
  117,616
  148,500
  184,336
  225,292
  271,470
  322,906
  379,584
  441,445
  508,401
  580,344
  657,156
  738,723
  824,938
  915,713
  1,010,978
  1,110,692
  1,214,838
  1,323,434
  1,436,524
  1,554,184
  1,676,523
  1,803,678
  1,935,815
  2,073,130
  2,215,846
  2,364,211
  2,518,501
Revenue / Adjusted assets
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
Average production assets, $m
  21,391
  28,698
  37,665
  48,444
  61,164
  75,924
  92,794
  111,814
  132,999
  156,344
  181,823
  209,401
  239,033
  270,671
  304,267
  339,777
  377,166
  416,404
  457,474
  500,370
  545,099
  591,678
  640,141
  690,530
  742,903
  797,328
  853,885
  912,667
  973,776
  1,037,325
Working capital, $m
  -355
  -477
  -625
  -804
  -1,016
  -1,261
  -1,541
  -1,857
  -2,209
  -2,596
  -3,019
  -3,477
  -3,970
  -4,495
  -5,053
  -5,643
  -6,263
  -6,915
  -7,597
  -8,309
  -9,052
  -9,826
  -10,631
  -11,467
  -12,337
  -13,241
  -14,180
  -15,156
  -16,171
  -17,227
Total debt, $m
  48,319
  53,907
  60,765
  69,008
  78,737
  90,025
  102,926
  117,472
  133,675
  151,528
  171,015
  192,106
  214,768
  238,964
  264,657
  291,815
  320,409
  350,417
  381,827
  414,633
  448,841
  484,464
  521,527
  560,064
  600,118
  641,741
  684,995
  729,951
  776,686
  825,287
Total liabilities, $m
  16,359
  21,948
  28,805
  37,049
  46,777
  58,066
  70,967
  85,513
  101,715
  119,569
  139,055
  160,146
  182,808
  207,004
  232,698
  259,856
  288,450
  318,458
  349,868
  382,674
  416,882
  452,505
  489,568
  528,105
  568,159
  609,782
  653,036
  697,991
  744,726
  793,328
Total equity, $m
  35,575
  47,728
  62,640
  80,567
  101,722
  126,270
  154,325
  185,957
  221,191
  260,015
  302,390
  348,255
  397,536
  450,152
  506,025
  565,083
  627,263
  692,520
  760,824
  832,164
  906,552
  984,019
  1,064,616
  1,148,419
  1,235,520
  1,326,034
  1,420,094
  1,517,854
  1,619,485
  1,725,173
Total liabilities and equity, $m
  51,934
  69,676
  91,445
  117,616
  148,499
  184,336
  225,292
  271,470
  322,906
  379,584
  441,445
  508,401
  580,344
  657,156
  738,723
  824,939
  915,713
  1,010,978
  1,110,692
  1,214,838
  1,323,434
  1,436,524
  1,554,184
  1,676,524
  1,803,679
  1,935,816
  2,073,130
  2,215,845
  2,364,211
  2,518,501
Debt-to-equity ratio
  1.360
  1.130
  0.970
  0.860
  0.770
  0.710
  0.670
  0.630
  0.600
  0.580
  0.570
  0.550
  0.540
  0.530
  0.520
  0.520
  0.510
  0.510
  0.500
  0.500
  0.500
  0.490
  0.490
  0.490
  0.490
  0.480
  0.480
  0.480
  0.480
  0.480
Adjusted equity ratio
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,024
  1,799
  2,746
  3,879
  5,211
  6,749
  8,501
  10,468
  12,653
  15,054
  17,701
  20,523
  23,550
  26,776
  30,197
  33,808
  37,605
  41,587
  45,751
  50,099
  54,629
  59,345
  64,251
  69,351
  74,651
  80,158
  85,882
  91,830
  98,015
  104,447
Depreciation, amort., depletion, $m
  758
  1,002
  1,300
  1,660
  2,084
  2,576
  3,138
  3,772
  4,478
  5,256
  6,061
  6,980
  7,968
  9,022
  10,142
  11,326
  12,572
  13,880
  15,249
  16,679
  18,170
  19,723
  21,338
  23,018
  24,763
  26,578
  28,463
  30,422
  32,459
  34,578
Funds from operations, $m
  1,782
  2,801
  4,047
  5,539
  7,294
  9,325
  11,639
  14,240
  17,132
  20,311
  23,762
  27,504
  31,518
  35,799
  40,339
  45,133
  50,177
  55,467
  61,001
  66,778
  72,799
  79,068
  85,589
  92,369
  99,414
  106,736
  114,345
  122,253
  130,474
  139,024
Change in working capital, $m
  -97
  -121
  -149
  -179
  -211
  -245
  -280
  -316
  -352
  -388
  -423
  -458
  -492
  -525
  -558
  -590
  -621
  -652
  -682
  -712
  -743
  -774
  -805
  -837
  -870
  -904
  -939
  -976
  -1,015
  -1,055
Cash from operations, $m
  1,878
  2,922
  4,196
  5,718
  7,506
  9,570
  11,919
  14,556
  17,484
  20,698
  24,185
  27,962
  32,010
  36,324
  40,897
  45,723
  50,798
  56,119
  61,683
  67,490
  73,542
  79,842
  86,394
  93,206
  100,284
  107,640
  115,284
  123,229
  131,489
  140,080
Maintenance CAPEX, $m
  -519
  -713
  -957
  -1,255
  -1,615
  -2,039
  -2,531
  -3,093
  -3,727
  -4,433
  -5,211
  -6,061
  -6,980
  -7,968
  -9,022
  -10,142
  -11,326
  -12,572
  -13,880
  -15,249
  -16,679
  -18,170
  -19,723
  -21,338
  -23,018
  -24,763
  -26,578
  -28,463
  -30,422
  -32,459
New CAPEX, $m
  -5,824
  -7,307
  -8,966
  -10,779
  -12,720
  -14,760
  -16,869
  -19,020
  -21,185
  -23,345
  -25,480
  -27,578
  -29,632
  -31,638
  -33,596
  -35,511
  -37,388
  -39,238
  -41,070
  -42,896
  -44,729
  -46,580
  -48,462
  -50,389
  -52,373
  -54,425
  -56,558
  -58,782
  -61,109
  -63,549
Cash from investing activities, $m
  -6,343
  -8,020
  -9,923
  -12,034
  -14,335
  -16,799
  -19,400
  -22,113
  -24,912
  -27,778
  -30,691
  -33,639
  -36,612
  -39,606
  -42,618
  -45,653
  -48,714
  -51,810
  -54,950
  -58,145
  -61,408
  -64,750
  -68,185
  -71,727
  -75,391
  -79,188
  -83,136
  -87,245
  -91,531
  -96,008
Free cash flow, $m
  -4,465
  -5,098
  -5,727
  -6,317
  -6,829
  -7,229
  -7,481
  -7,557
  -7,429
  -7,080
  -6,506
  -5,677
  -4,602
  -3,281
  -1,721
  70
  2,084
  4,308
  6,732
  9,345
  12,134
  15,092
  18,209
  21,478
  24,894
  28,452
  32,149
  35,984
  39,958
  44,071
Issuance/(repayment) of debt, $m
  4,462
  5,588
  6,857
  8,244
  9,728
  11,288
  12,901
  14,546
  16,202
  17,854
  19,486
  21,091
  22,662
  24,196
  25,694
  27,158
  28,594
  30,009
  31,410
  32,806
  34,208
  35,623
  37,063
  38,537
  40,054
  41,623
  43,254
  44,955
  46,735
  48,601
Issuance/(repurchase) of shares, $m
  8,633
  10,353
  12,166
  14,048
  15,944
  17,798
  19,555
  21,163
  22,580
  23,770
  24,674
  25,341
  25,730
  25,840
  25,676
  25,250
  24,575
  23,670
  22,552
  21,242
  19,759
  18,121
  16,346
  14,451
  12,450
  10,356
  8,179
  5,930
  3,615
  1,242
Cash from financing (excl. dividends), $m  
  13,095
  15,941
  19,023
  22,292
  25,672
  29,086
  32,456
  35,709
  38,782
  41,624
  44,160
  46,432
  48,392
  50,036
  51,370
  52,408
  53,169
  53,679
  53,962
  54,048
  53,967
  53,744
  53,409
  52,988
  52,504
  51,979
  51,433
  50,885
  50,350
  49,843
Total cash flow (excl. dividends), $m
  8,631
  10,844
  13,296
  15,975
  18,843
  21,858
  24,975
  28,153
  31,353
  34,544
  37,654
  40,755
  43,790
  46,755
  49,649
  52,478
  55,253
  57,987
  60,694
  63,393
  66,101
  68,836
  71,619
  74,466
  77,398
  80,430
  83,582
  86,869
  90,308
  93,915
Retained Cash Flow (-), $m
  -9,657
  -12,153
  -14,912
  -17,927
  -21,155
  -24,548
  -28,056
  -31,632
  -35,234
  -38,824
  -42,375
  -45,865
  -49,281
  -52,616
  -55,873
  -59,058
  -62,180
  -65,257
  -68,304
  -71,341
  -74,388
  -77,466
  -80,598
  -83,802
  -87,101
  -90,514
  -94,061
  -97,760
  -101,630
  -105,689
Prev. year cash balance distribution, $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 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
  -1,026
  -1,309
  -1,616
  -1,952
  -2,312
  -2,690
  -3,081
  -3,479
  -3,880
  -4,280
  -4,721
  -5,110
  -5,490
  -5,862
  -6,225
  -6,579
  -6,927
  -7,270
  -7,609
  -7,948
  -8,287
  -8,630
  -8,979
  -9,336
  -9,704
  -10,084
  -10,479
  -10,891
  -11,322
  -11,774
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
  -984
  -1,198
  -1,407
  -1,608
  -1,792
  -1,952
  -2,081
  -2,174
  -2,229
  -2,244
  -2,242
  -2,180
  -2,087
  -1,968
  -1,827
  -1,672
  -1,507
  -1,339
  -1,172
  -1,010
  -857
  -716
  -588
  -476
  -377
  -294
  -225
  -168
  -124
  -89
Current shareholders' claim on cash, %
  89.9
  81.8
  75.3
  70.0
  65.6
  61.9
  58.8
  56.2
  54.0
  52.1
  50.4
  49.0
  47.8
  46.8
  45.9
  45.2
  44.5
  43.9
  43.5
  43.1
  42.7
  42.4
  42.2
  42.0
  41.8
  41.7
  41.6
  41.6
  41.5
  41.5

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 Inc. (CME)

Valuation Ratios
P/E Ratio 47.1
Price to Sales 20.1
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 42.1
Price to Free Cash Flow 44.5
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 $4309 million for the last fiscal year's total revenue generated by CME Group Inc.. The default revenue input number comes from 0001 income statement of CME Group Inc.. 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 37.4% 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 Inc., 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 Inc..
    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 36.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.4% for CME Group Inc..

Corporate tax rate of 27% is the nominal tax rate for CME Group Inc.. 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 361.3%.

Life of production assets of 123.5 years is the average useful life of capital assets used in CME Group Inc. 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 -6%. 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 - $25918.5 million for CME Group Inc. - 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 357.823 million for CME Group Inc. 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 Inc. at the current share price and the inputted number of shares is $76.4 billion.

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