It has been about a month since the last earnings report for CBOE Holdings (CBOE). Shares have added about 3.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CBOE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cboe Global's Q2 Earnings Beat Estimates, Rise Y/Y
Cboe Global Markets second-quarter 2019 adjusted earnings of $1.13 per share beat the Zacks Consensus Estimate by 5.6% on the back of its Options segment. Moreover, the bottom line increased 7.6% year over year.
Total revenues came in at $283.2 million, missing the Zacks Consensus Estimate by 0.3%. Moreover, the top line dipped nearly 0.1% due to lower trading volume across all business segments apart from the Options segment.
Average daily volume for Options inched up 2% year over year while the revenue per contract or RPC slipped 1% in the second quarter.
Total RPC for U.S. Futures was up 7% year over year.
Total operating expenses increased 2.3% year over year to $158 million.
Adjusted operating margin for the quarter under review was 63.6%, reflecting lower costs.
As of Jun 30, 2019, CBOE Global had cash and cash equivalents of $161.3 million, down 41.3% from the figure at 2018 end. Total assets were $5.2 billion in the second quarter, down 3% from the level at 2018 end.
At the end of the second quarter, long-term debt of the company stands at $916.6 million, up 0.1% year over year.
Total shareholders’ equity was $3.3 billion at the end of the reported quarter, up 2.7% from the value on Dec 31, 2018.
Share Repurchase and Dividend Update
The company paid out cash dividends worth $34.8 million or 31 cents per share in the second quarter.
As of Jun 30, 2019, the company has around $171.1 million left under its current share repurchase authorization.
Fiscal 2019 Outlook
Adjusted operating expenses are now expected between $405 and $413 million, down from the previous estimate of $415-$423 million.
Capital expenditures are now projected in the $50-$55 million band.
The effective tax rate on adjusted earnings for 2019 is likely to be in the lower end of the 27-29% range.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
At this time, CBOE has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, CBOE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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