CME Group vs. Intercontinental: Which Exchange Stock is a Better Buy?
May 22, 2025
A rise in trading volumes, given significant volatility, product expansion through prudent acquisitions and the increased adoption of a greater number of crypto assets are expected to benefit exchange behemoths —
CME Group
CME and
Intercontinental Exchange
ICE.
Increased focus on expanding non-trading revenue streams, including market technology, listings, and information services, infuses dynamism in the business profile of the industry players. Moreover, President Trump's stance on crypto is a positive for the sector. Nevertheless, shifts in investment strategies and regulatory compliance continue to present significant challenges.
Yet, as an investment option, which stock is more attractive? Let’s closely look at the fundamentals of these stocks.
Factors to Consider for CME
CME Group is the largest futures exchange in the world in terms of trading volume and notional value traded.
CME Group continues to exhibit strong organic growth, leveraging its role as a major exchange, which benefits from increased market volatility. Increased volatility typically drives higher trading activity, resulting in greater clearing and transaction fees, which are CME’s main revenue driver. These have grown steadily, reinforcing their positive long-term revenue prospects.
The company is also seeing a rise in electronic trading volumes and greater involvement in crypto markets, supported by the broader adoption of digital assets. Anticipating a more favorable regulatory stance toward cryptocurrencies, CME is well-positioned to take advantage of these evolving trends.
CME’s strategic investments are yielding solid returns, while its continued emphasis on cost efficiency is helping to expand margins. Backed by a strong capital base, the company is able to invest in the growth of its market data business, expand its product offerings and execute thoughtful capital deployment strategies.
From a financial standpoint, CME has delivered consistently strong results, with free cash flow conversion rates surpassing 85% in recent quarters, thus highlighting the strength and reliability of its earnings.
On the flip side, CME faces concentration risk, as a large share of its clearing and transaction fee revenues still comes from interest rate and equity products, despite efforts to diversify. It is also exposed to geographic concentration as the majority of its revenues is generated from North American markets.
The company also operates in a competitive environment, with its derivatives business under increasing pressure from emerging crypto trading platforms, and other segments facing competition from electronic communication networks, single-dealer platforms, and bank-owned trading venues.
Despite these odds, its return on equity of 14% betters the industry average of 13.9%.
Factors to Consider for ICE
ICE has evolved from a small start-up less than three decades ago to a company whose networks help customers manage risk, harness data and improve workflow efficiency. With over 5,000 indices representing more than $1 trillion in benchmark assets under management, the company boasts being the second-largest fixed income provider globally.
ICE’s revenue prospects seem strong, banking on the strength of its global data services and index businesses, along with steady expansion in its pricing and reference data offerings. The ICE Global Network continues to be a key growth driver, supported by strong demand for its advanced desktop platforms, data feeds, and derivatives analytics.
Strategic buyouts and collaborations have not only fueled its growth but have also led to achieving expense synergies.
ICE’s growth is also fueled by the ongoing digital transformation of the U.S. residential mortgage industry. Already operating the nation's largest mortgage network, ICE is expected to further enhance its market presence through the integration of Ellie Mae into ICE Mortgage Technology, strengthening its service offerings and expanding its mortgage footprint.
ICE’s robust, low-risk balance sheet is anticipated to remain a key pillar of support, offering financial stability and flexibility to pursue strategic investments and maintain long-term growth momentum.
Its return on equity of 13.3% is lower than the industry average.
Estimates for CME and ICE
The Zacks Consensus Estimate for CME’s 2025 revenues and EPS implies a year-over-year increase of 7.2% and 8.7%, respectively. EPS estimates have moved northward over the past 30 days.
Image Source: Zacks Investment Research
On the other hand, the Zacks Consensus Estimate for ICE’s 2025 revenues and EPS implies a year-over-year increase of 7.1% and 13.8%, respectively. Its EPS estimates have also moved northward over the past 30 days.
Image Source: Zacks Investment Research
Are CME and ICE Shares Expensive?
CME is trading at a price-to-earnings multiple of 24.94, above its median of 23.21 over the last five years. ICE’s price-to-earnings multiple sits at 24.26, above its median of 21.97 over the last five years.
Image Source: Zacks Investment Research
Conclusion
CME Group is well-positioned for continued growth and market leadership, supported by its solid portfolio of futures products in emerging markets, its broad array of derivative offerings, and extensive global footprint. It is further aided by its over-the-counter capabilities, increasing reliance on electronic trading, cross-selling through strategic partnerships, and a strong global presence with sound liquidity.
ICE is set for growth, driven by a powerful portfolio and comprehensive risk-management services that ensure steady revenues. Its growth is further reinforced by strategic acquisitions, a healthy balance sheet, and effective capital deployment. The company also has a remarkable history of dividends, having more than doubled its payouts in the last six years.
Yet, on the basis of return on equity, which reflects a company’s efficiency in generating profit from shareholders' equity as well as gives a clear picture of the company's financial health, CME scores higher than ICE.
CME shares have gained 21.3% year to date, while ICE has gained 17.2%. Though both carry a Zacks Rank #2 (Buy), CME seems a safer bet.
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