Cboe Global Rallies 17% YTD: Can the Stock Retain the Bull Run?
Shares of Cboe Global Markets, Inc. CBOE gained 17.4% in the year-to-date period, outperforming the industry’s rise of 16%, the Finance sector’s increase of 1.6% as well as the Zacks S&P 500 Composite’s gain of 6.6% in the same time frame. With a market capitalization of 21.4 billion, the average volume of shares traded in the last three months was 0.8 million.
Strong market position, global reach, proprietary products’ strength and solid capital position continue to drive CBOE shares. This Zacks Rank #3 (Hold) company has a VGM Score of B.
CBOE has a solid history of delivering earnings surprises in the last four reported quarters. Its earnings grew 12.1% in the last five years, better than the industry’s average of 9.8%.
CBOE Outperforms Industry, Sector and S&P 500 YTD
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Positive Analyst Sentiment Instills Confidence in CBOE
Four of the nine analysts covering the stock have raised estimates for 2024 and five for 2025 over the past 30 days. The consensus estimate for 2024 and 2025 increased 0.9% and 0.3%, respectively.
The Zacks Consensus Estimate for 2024 and 2025 earnings indicates an improvement of 10.5% and 5.5%, respectively. The company has a Growth Score of B.
Will CBOE’s Rally Stay?
CBOE closed at $205.40 on Friday, above the 50-day simple moving average (SMA) of $187.71, representing an uptrend. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
CBOE Price Movement vs 50-Day Moving Average
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CBOE is the largest stock exchange operator by volume in the United States and a leading market globally for ETP trading. A diversified business mix with recurring revenues, accelerated growth banking on recurring non-transaction revenues, use of technology and prudent buyouts poise it well for growth.
CBOE’s impressive revenue growth reflects its organic strength. We estimate the 2026 top line to witness a three-year CAGR of 5.6%, largely driven by transaction fees. CBOE estimates organic total net revenue growth between 6% and 8% in 2024. A volatile market drives trading volume, which, in turn, fuels transaction fees.
The top line also benefits from recurring non-transaction revenues. CBOE estimates Data and Access Solutions organic net revenue growth in the range of 7%-10% in the medium term. We estimate access and capacity fees in 2026 to witness a three-year CAGR of 5.5% and 2025 market data revenues to register a three-year CAGR of 4.6%.
The company’s inorganic growth story is also impressive. Acquisitions have helped it achieve a greater global breadth of services and products, as well as new distribution channels apart from generating revenues and cost synergies.
Cboe Global enjoys a strong liquidity position despite cash outlays to enhance operating leverage. It has been strengthening its balance sheet by improving its cash position and lowering its debt balance. The leverage ratio, as well as the times interest earned, compares favorably with the industry average.
Solid capital management supports strategic investments that drive growth, as well as distribute wealth to shareholders. CBOE increased dividends for 13 straight years and has $204.4 million left under its current share repurchase authorization.
CBOE’s Favorable Return on Capital
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. The return on invested capital in the trailing 12 months was 11.8%, higher than the industry’s average of 4.9%.
CBOE’s return on equity has been improving since 2019, reflecting its efficiency in utilizing shareholders’ funds. ROE over the trailing 12 months was 22.6%, outperforming the industry average of 13.2%.
Stocks to Consider
Some better-ranked stocks from the finance sector are Abacus Life, Inc. ABL, Enact Holdings ACT and Assurant Inc. AIZ. Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for Abacus Life’s 2024 and 2025 earnings per share (EPS) indicate a year-over-year increase of 9.6% and 28.7%, respectively. Year to date, ABL has soared 5.6%.
Estimates for Enact Holdings’ 2024 and 2025 EPS indicate a year-over-year increase of 0.9% and 1.1%, respectively. Year to date, ACT has gained 23%.
Estimates for Assurant’s 2024 and 2025 EPS indicate a year-over-year increase of 6.8% and 6.1%, respectively. Year to date, AIZ has rallied 16.5%.
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