CME Group(CME) ZACKS·2025-03-05 08:14Core Viewpoint - The Zacks Securities and Exchanges industry is expected to benefit from increased trading volumes, product expansion, and the growing adoption of crypto assets, with a focus on enhancing non-trading revenue sources [1][6][4]. Industry Overview - The industry consists of companies that operate electronic marketplaces for trading stocks, options, bonds, and commodity contracts, generating revenue from fees charged to listed companies [2][3]. - Companies in this sector provide various data and listing services, including pricing data, analytics, and risk management solutions [3]. Trends Influencing the Industry - Volatility and Trading Volume: Trading volatility is driving sustainable growth in transaction and clearing fees, which are crucial for revenue [4]. - Pro-Crypto Environment: A potential second term for Trump may create a favorable environment for crypto trading, leading to increased fees and profits [5]. - Mergers and Acquisitions: The industry is experiencing ongoing mergers and acquisitions, allowing companies to enhance their product offerings and market reach [7][8]. Financial Outlook - The securities exchanges market is projected to grow at a CAGR of 12.1% to reach $49.6 billion by 2028, driven by rising demand for diverse investment opportunities [6]. - The Zacks Securities and Exchanges industry has outperformed the broader finance sector and the S&P 500, with a year-to-date gain of 23.2% [14]. Current Valuation - The industry is currently trading at a trailing 12-month price-to-book ratio of 3.94X, lower than the S&P 500's 8.35X and the finance sector's 4.2X [15]. Company Highlights - Nasdaq: Focused on maximizing non-trading revenue and technology services, with a consensus EPS growth of 12.8% and 13.6% for 2025 and 2026, respectively [17][18]. - CME Group: The largest futures exchange globally, with a projected EPS growth of 2.6% and 4.4% for 2025 and 2026 [20][21]. - Intercontinental Exchange: A leading operator of regulated exchanges, expected to see EPS growth of 10.9% and 11.7% for 2025 and 2026 [22][23]. - Cboe Global Markets: Positioned for growth with an expanding product line, anticipating EPS growth of 4.1% and 7.9% for 2025 and 2026 [24][25].