Cboe Global (CBOE) Up 53% in a Year: Time to Add to Portfolio?
Cboe Global Markets' CBOE shares have rallied 52.7% in a year, outperforming 15.2%, 9.5% and 22% growth of the industry, the Finance sector and the Zacks S&P 500 composite, respectively. With a market capitalization of $19.7 billion, the average volume of shares traded in the last three months was 0.9 million.
CBOE’s strong market position, global reach, proprietary products’ strength and solid capital position continue to drive its shares. The consensus estimate for this Zacks Rank #1 (Strong Buy) company’s 2024 earnings has moved up 1.1 % in the past seven days, reflecting analysts’ optimism.
Cboe Global, the largest stock exchange operator by volume in the United States and a market leader globally for ETP trading, has a solid history of delivering earnings surprises in the last four reported quarters. Its earnings grew 13.7% in the last five years, better than the industry average of 10.5%.
Return on invested capital hovered around 10% over the last few years. The company has raised its capital investment significantly, reflecting CBOE’s efficiency in utilizing funds to generate income.
It has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.
What’s Driving the Stock?
A diversified business mix with recurring revenues, growth in recurring non-transaction revenues, use of technology and prudent buyouts poise CBOE well for growth.
The Zacks Consensus Estimate for 2024 earnings is pegged at $8.18, suggesting a year-over-year increase of 6.1% on 5.6% higher revenues of $2 billion.
The expected long-term earnings growth rate is 12.8%, better than the industry average of 8.8%. We expect 2025 bottom line to grow at a three-year CAGR of 3.3%.
It has a Growth Score of B. This style score analyzes the growth prospects of a company.
CBOE’s strength lies in organic growth, as reflected in its revenue growth story. We estimate 2025 net top line to witness a three-year CAGR of 5.9%, largely driven by transaction fees. A volatile market drives trading volume, which, in turn, fuels transaction fees.
Also, recurring non-transaction revenues should continue to fuel the top line. We estimate access and capacity fees in 2025 to witness a three-year CAGR of 6.3%. Our model suggests 2025 market data revenues to register a three-year CAGR of 4.5%.
Banking on the strength of its inorganic growth, CBOE achieved a greater global breadth of services and products as well as new distribution channels apart from generating revenue and cost synergies. It also remains focused on improving margins through cost management.
A solid capital management policy supports strategic growth investments as well as capital payout. CBOE increased dividends for 13 straight years. Its dividend yield is 1.2%.
Other Stocks to Consider
Some other top-ranked stocks from the finance sector are MarketAxess MKTX, Coinbase Global COIN and Chubb Limited CB, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for MarketAxess’ 2024 earnings per share indicate an increase of 12.9% from the year-ago reported level. The consensus mark for earnings has moved 1.9% north in the last 30 days. In a year, MKTX has lost 18.8%. The expected long-term earnings growth rate is 8.1%.
Coinbase has a decent record of beating earnings estimates in three of the last four quarters and missing in one, the average surprise being 62.95%. COIN stock has risen 168.7% in a year. The Zacks Consensus Estimate for COIN’s 2024 earnings per share indicates an improvement of 35.1% from the prior-year reported level.
Chubb delivered a trailing four-quarter average earnings surprise of 6.51%. In a year, the stock has risen 3.9%. The Zacks Consensus Estimate for CB’s 2024 earnings suggests a rise of 6.9% from the year-ago reported figure.
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Chubb Limited (CB) : Free Stock Analysis Report
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