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Why You Should Hold Cboe Global (CBOE) in Your Portfolio

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Cboe Global Markets’ CBOE expanding product line across asset classes, geographic reach, diversifying business mix and solid liquidity make its worthy of retention in one’s portfolio.

Zacks Rank & Price Performance

Cboe Global currently carries a Zacks Rank #3 (Hold). Year to date, the stock has rallied 9.6%, outperforming the industry’s increase of 2.8%.

Return on Equity (ROE)

The company’s ROE for the trailing 12 months is 17.4%, better than the industry average of 11.8%. It reflects the company’s efficiency in utilizing shareholders’ fund.

Estimate Revision

The Zacks Consensus Estimate for 2021 and 2022 has moved 1.2% and 0.6% north in the past 30 days, reflecting analyst optimism.

Style Score

The company is well poised for progress, as is evident from its favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.

It has an impressive Growth Score of A. This this style score helps analyzes the growth prospects for a company.

Earnings Surprise History

Cboe Global Markets surpassed estimates in three of the last four reported quarters, with the average beat being 3.72%.

Business Tailwinds

One of the largest stock exchange operators by volume in the United States and a leading market globally for ETP trading, Cboe Global Markets boasts strength in its proprietary products, primarily SPX options, VIX options and VIX futures.

Higher transaction fees driven by trading volume growth, access and capacity fees, market data fees, regulatory fees plus other revenues have been continually fueling top-line growth. Cboe Global estimates recurring non-transactional revenues of 6% to 7% in 2021. Access and capacity fees plus proprietary market data are expected to increase 7% to 8% in 2021. Longer to mid-term, the company estimates organic top line compounded average growth of 4% to 6%.

Cboe Global Markets has an impressive inorganic growth story, given its prudent acquisitions. Strategic acquisitions have helped the company to gain a competitive edge by diversifying as well as adding capabilities to its portfolio. Cboe Global estimates net revenue contribution from recent acquisitions in the range of 4% to 6%, as it plans to invest approximately $25 million in organic growth initiatives in 2021.

Besides, Cboe Global explores new markets like the Middle East, Scandinavia and Asia.

Cboe Global Markets enjoys strong liquidity that mitigates balance sheet risks but also paves the way for an accelerated capital deployment.

It has hiked dividend each year since IPO, and increased the same at a five year CAGR of 13%. The board of directors authorized up to an additional $200 million for share repurchase program.

Stocks to Consider

Some better-ranked stocks from the finance sector are Markel MKL, CNA Financial CNA and Alleghany Y.

Markel delivered an earnings surprise of 75.11% in the last reported quarter. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CNA Financial delivered an earnings surprise of 16.04% in the last reported quarter. It carries a Zacks Rank #2 (Buy).

Alleghany delivered an earnings surprise of 48.79% in the last reported quarter. It carries a Zacks Rank #2.

Zacks Top 10 Stocks for 2021

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Cboe Global Markets, Inc. (CBOE) : Free Stock Analysis Report

CNA Financial Corporation (CNA) : Free Stock Analysis Report

Markel Corporation (MKL) : Free Stock Analysis Report

Alleghany Corporation (Y) : Free Stock Analysis Report

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Zacks Investment Research