Critical Contrast: CME Group (CME) vs. T. Rowe Price (TROW)

CME Group (NASDAQ: CME) and T. Rowe Price (NASDAQ:TROW) are both large-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Insider and Institutional Ownership

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83.4% of CME Group shares are held by institutional investors. Comparatively, 73.1% of T. Rowe Price shares are held by institutional investors. 0.5% of CME Group shares are held by insiders. Comparatively, 3.1% of T. Rowe Price shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for CME Group and T. Rowe Price, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CME Group 0 3 10 0 2.77
T. Rowe Price 1 7 3 0 2.18

CME Group currently has a consensus price target of $164.46, indicating a potential downside of 0.45%. T. Rowe Price has a consensus price target of $110.33, indicating a potential upside of 1.33%. Given T. Rowe Price’s higher probable upside, analysts clearly believe T. Rowe Price is more favorable than CME Group.

Profitability

This table compares CME Group and T. Rowe Price’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CME Group 111.49% 7.68% 2.11%
T. Rowe Price 31.07% 25.30% 19.64%

Risk & Volatility

CME Group has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500. Comparatively, T. Rowe Price has a beta of 1.21, suggesting that its share price is 21% more volatile than the S&P 500.

Valuation & Earnings

This table compares CME Group and T. Rowe Price’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CME Group $3.64 billion 15.43 $4.06 billion $4.77 34.63
T. Rowe Price $4.79 billion 5.56 $1.50 billion $5.43 20.05

CME Group has higher earnings, but lower revenue than T. Rowe Price. T. Rowe Price is trading at a lower price-to-earnings ratio than CME Group, indicating that it is currently the more affordable of the two stocks.

Dividends

CME Group pays an annual dividend of $2.80 per share and has a dividend yield of 1.7%. T. Rowe Price pays an annual dividend of $2.80 per share and has a dividend yield of 2.6%. CME Group pays out 58.7% of its earnings in the form of a dividend. T. Rowe Price pays out 51.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. T. Rowe Price has increased its dividend for 31 consecutive years. T. Rowe Price is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

T. Rowe Price beats CME Group on 10 of the 17 factors compared between the two stocks.

CME Group Company Profile

CME Group Inc., through its subsidiaries, operates contract markets for the trading of futures and options on futures contracts worldwide. It offers a range of products across various asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products, and metals. The company executes trade through its electronic trading platforms, open outcry, and privately negotiated transactions, as well as provides hosting, connectivity, and customer support for electronic trading through its co-location services. It also provides clearing and settlement services for exchange-traded contracts, as well as for cleared swaps; and regulatory reporting solutions for market participants through its repository services in the United States, the United Kingdom, Canada, and Australia. In addition, the company offers a range of market data services, including live quotes, delayed quotes, market reports, and historical data services, as well as index services. It serves professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, governments, and central banks. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007. CME Group Inc. was founded in 1898 and is headquartered in Chicago, Illinois.

T. Rowe Price Company Profile

T. Rowe Price Group, Inc. is a publicly owned investment manager. The firm provides its services to individuals, institutional investors, retirement plans, financial intermediaries, and institutions. It launches and manages equity and fixed income mutual funds. The firm invests in the public equity and fixed income markets across the globe. It employs fundamental and quantitative analysis with a bottom-up approach. The firm utilizes in-house and external research to make its investments. It employs socially responsible investing with a focus on environmental, social, and governance issues. It makes investment in late-stage venture capital transactions and usually invests between $3 million and $5 million. The firm was previously known as T. Rowe Group, Inc. and T. Rowe Price Associates, Inc. T. Rowe Price Group, Inc. was founded in 1937 and is based in Baltimore, Maryland, with additional offices in Colorado Springs, Colorado; Owings Mills, Maryland; San Francisco, California; Tampa, Florida; Toronto, Ontario; Hellerup, Denmark; Amsterdam, The Netherlands; Luxembourg, Grand Duchy of Luxembourg; Zurich, Switzerland; Dubai, United Arab Emirates; London, United Kingdom; Sydney, New South Wales; Hong Kong; Tokyo, Japan; Singapore; Frankfurt, Germany, Madrid, Spain, Milan, Italy, Stockholm, Sweden, Melbourne, Australia, and Amsterdam, Netherlands.

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