BGC Group, Inc. (BGC) stock intrinsic value fair value estimate & owner earnings analysis

BGC Group is a global brokerage and financial-technology company. Its core business puts buyers and sellers of financial instruments together, mainly in interest-rate products, foreign exchange, credit, and equities, using a mix of human brokers and its own electronic trading platforms (marketed under the Fenics brand). It also owns a fast-growing but still young U.S. futures exchange, FMX, built with a consortium of major banks as equity partners, and in April 2025 it acquired OTC Global, an energy and commodities brokerage that materially expanded that part of the business. The company has gone through real change in the last several years. It separated its former real-estate services arm, Newmark, by the end of 2020, and sold an insurance brokerage business in 2021. In mid-2023 it simplified its own corporate structure, converting from a multi-entity partnership arrangement into a single, more conventional corporation. None of this affects how the business earns money day to day, but it does mean that results from before 2021 describe a different, larger company and are not a fair guide to what BGC looks like today; this analysis is built from 2021 onward. A notable feature of BGC's economics is how much of its cost base is paid in stock and partnership-unit-like awards to brokers and employees rather than in cash. This is a real and recurring cost to shareholders through dilution, and it has run consistently between roughly 11% and 18% of revenue over the last five years - it is treated as a cost in this analysis, not added back. Owner earnings (cash generated by the business after this compensation cost and after the ongoing investment needed just to maintain the platform, before any expansion spending) have run between about $0.10 and $0.54 per share over the last five fiscal years, with the low point in 2023 and the high point in 2025, the latter boosted by the OTC Global acquisition and an unusually favorable year for working capital. The typical, sustainable level over that stretch is closer to $0.15 per share, and that is the starting point used here rather than either the low or the high year. Looking ahead, the base case assumes the business keeps growing at a healthy but moderating pace: an initial boost as OTC Global's results are included for a full year instead of nine months, together with roughly $25 million of annual savings from a cost-reduction program completed in 2025, then growth settling into the high single digits as the trading and brokerage business and its electronic platforms continue to expand, and finally leveling off to a modest, inflation-like pace in the back half of the 10-year outlook and beyond - consistent with a brokerage franchise that has already operated profitably through several very different interest-rate cycles. The bear case assumes a repeat of the kind of prolonged, quiet trading environment the business has already experienced (revenue fell about 11% in 2022 when volatility dried up), this time lasting three to four years rather than one, at the same time as the company is carrying meaningfully more debt than it used to (borrowings roughly doubled since 2023, at a rate that has risen to about 6.6%). In that scenario, earnings settle at a permanently lower level with only slow growth after that. It does not assume anything worse than the business has already shown it can experience. The bull case assumes the recent growth rate seen in the core brokerage and electronic-trading business continues for longer, that FMX - still less than two years into live trading of U.S. Treasury and interest-rate futures, but backed by real capital commitments from major bank partners with a direct incentive to route volume to it - gains meaningful share in a very large existing futures market, and that the cost savings and the OTC Global acquisition perform at the better end of what has already been demonstrated. Putting these together, the shares appear worth roughly $2.75 in the bear case, $6.18 in the base case, and $9.58 in the bull case. Given how much the bear case depends on debt levels and a cyclical downturn that has already been seen once, a meaningful discount to the base-case estimate is warranted; on that basis, the margin-of-safety price is around $3.80. One item could not be fully reconciled from the filings: the exact split between organic and acquired growth in a few smaller revenue lines in 2025 was disclosed only in aggregate, though the two largest pieces (OTC Global and underlying brokerage growth) were both clearly disclosed and are reflected above.