Cboe Global (CBOE) Posts Strong 2018 Volumes, Guides Q4 RPC
Cboe Global Markets, Inc. CBOE reported solid average daily volume (ADV) for 2018. Total ADV of 8.2 million contracts increased 13.3% year over year, with each business segment recording growth.
Total contracts for 2018 were 2.1 billion, up 13.3% year over year. Of this, options contracts increased 13.8% to 1.7 billion while futures contracts rose 2.2% to 74 million. Options ADV was 7.9 million and Futures ADV was 0.3 million.
U.S. Equities Matched ADV came in at 337.8 billion shares in 2018, up 8.3% from 2017. European Equities Matched reflected an increase of 10.7% year over year to €2,655 billion. Global FX Matched surged 26.6% to nearly $9,683 billion.
Average daily volume across all four Cboe Global Markets' options exchanges (Cboe, C2, BZX and EDGX) scaled an all-time high in 2018.
CBOE Global Markets has been witnessing solid average daily volumes over a considerable period of time, given its compelling product portfolio. This, in turn, has been driving transaction fees higher, which accounted for the lion’s share of total operating revenues.
Concurrently, the company guided fourth-quarter average revenue per contract (RPC). It expects total Options to be in line with 27.4 cents reported for the two-month period ending Nov 30, 2018. While RPC for index options is estimated to be 74.6 cents, RPC for multiply-listed options is projected to be 8.4 cents. Also, RPC for Futures is predicted to be in line with $1.679.
Shares of CBOE Global Markets have underperformed the industry in a year. The stock has lost 25.5% versus the industry’s rally of 12.1%. Nonetheless, the company’s solid market position, global reach, a diversified portfolio and strength in its proprietary products, primarily SPX options, VIX options and VIX futures, should help it gain momentum.
Cboe Global is set to report fourth-quarter results on Feb 8. The Zacks Consensus Estimate for quarterly earnings is pegged at $1.21, indicating a year-over-year increase of 39.1% on 10.7% higher revenues. Our proven model does not conclusively show that the company is likely to beat on earnings this time around. While its Zacks Rank #1 (Strong Buy) increases the predictive power of ESP, an Earnings ESP of 0.00% makes surprise prediction difficult. The company delivered positive surprise in the last three reported quarters.
Recently, securities exchanges like CME Group Inc. CME, Intercontinental Exchange, Inc. ICE and MarketAxess Holdings Ltd. MKTX also reported volumes. While CME Group’s September ADV of 19.2 million contracts per day grew 18% year over year, Intercontinental Exchange’s ADV improved 20% year over year. MarketAxess reported trading volume of $131.2 billion for 2018.
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