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Is it Time to Add CBOE Holdings (CBOE) to Your Portfolio?
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Shares of CBOE Holdings, Inc. (CBOE - Free Report) outperformed the Zacks categorized Securities and Exchange industry year to date. While CBOE Holdings’ shares gained 16.13%, the industry gained 6.12%. Notably, the stock has also outperformed the S&P 500 over the same time frame. Estimates have also been revised upward over the last 30 days as evidenced by the company’s favorable Zacks Rank #1 (Strong Buy). Its return on equity is 24.3%, which is much higher than the industry’s return of 9.5%.
The company has been witnessing solid revenue growth due to increasing transaction fees. CBOE Holdings’ strong market position and global reach with a robust portfolio of proprietary products, primarily SPX options, VIX options and VIX futures as well as product launches will continue to drive revenues higher. In fact, the company’s top line has increased at a four-year CAGR of 6%.
CBOE Holdings’ inorganic growth is buoyed by strategic buyouts. The most noteworthy being the acquisition of Bat Global Markets in Feb 2017. The company expects to achieve $50 million in annualized expense synergies within three years of the takeover. The metric is expected to increase to $65 million of within five years of the closure of the transaction, of these the company estimates $20 million in GAAP run rate synergies in 2017. While the acquisition will expand CBOE Holdings’ global footprint with solid pan-European equities and global FX position, it will also increase the means to generate non-transactional revenues.
The company also effectively deploys capital to enhance shareholders’ value. To this end, it engages in dividend increases and share buybacks.
We note that the Zacks Consensus Estimate has moved up 10.1% to $3.38 for 2017 and 6.4% to $3.84 for 2018 in the last 30 days. The expected long-term earnings growth rate is currently pegged at 16.40%, which is better than the industry average of 12.10%. Diversified product portfolio and expansion moves should fuel growth prospects. Also, the company’s price earnings growth ratio of 1.34 compares favorably with the industry average 1.40.
Other Stocks That Warrant a Look
Investors interested in the finance sector can also consider MarketAxess Holdings Inc. (MKTX - Free Report) , Total System Services Inc. , Visa Inc. (V - Free Report) .
MarketAxess is a leading multi-dealer trading platform that offers institutional investors access to global liquidity in products like U.S. high-grade corporate bonds, emerging markets and high-yield bonds, European bonds, U.S. agency bonds, credit derivatives and other fixed-income securities. The company had an average positive surprise of 7.26% in the last four quarters. The stock carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Total System Services provides electronic payment processing, merchant services and related services to financial and non-financial institutions in the U.S. and internationally. The company had an average positive surprise of 3.59% in the last four quarters. The stock carries a Zacks Rank #2 (Buy).
Visa operates retail electronic payments network worldwide. The company had an average positive surprise of 7.24% in the last four quarters. The stock carries a Zacks Rank #2.
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Is it Time to Add CBOE Holdings (CBOE) to Your Portfolio?
Shares of CBOE Holdings, Inc. (CBOE - Free Report) outperformed the Zacks categorized Securities and Exchange industry year to date. While CBOE Holdings’ shares gained 16.13%, the industry gained 6.12%. Notably, the stock has also outperformed the S&P 500 over the same time frame. Estimates have also been revised upward over the last 30 days as evidenced by the company’s favorable Zacks Rank #1 (Strong Buy). Its return on equity is 24.3%, which is much higher than the industry’s return of 9.5%.
The company has been witnessing solid revenue growth due to increasing transaction fees. CBOE Holdings’ strong market position and global reach with a robust portfolio of proprietary products, primarily SPX options, VIX options and VIX futures as well as product launches will continue to drive revenues higher. In fact, the company’s top line has increased at a four-year CAGR of 6%.
CBOE Holdings’ inorganic growth is buoyed by strategic buyouts. The most noteworthy being the acquisition of Bat Global Markets in Feb 2017. The company expects to achieve $50 million in annualized expense synergies within three years of the takeover. The metric is expected to increase to $65 million of within five years of the closure of the transaction, of these the company estimates $20 million in GAAP run rate synergies in 2017. While the acquisition will expand CBOE Holdings’ global footprint with solid pan-European equities and global FX position, it will also increase the means to generate non-transactional revenues.
The company also effectively deploys capital to enhance shareholders’ value. To this end, it engages in dividend increases and share buybacks.
We note that the Zacks Consensus Estimate has moved up 10.1% to $3.38 for 2017 and 6.4% to $3.84 for 2018 in the last 30 days. The expected long-term earnings growth rate is currently pegged at 16.40%, which is better than the industry average of 12.10%. Diversified product portfolio and expansion moves should fuel growth prospects. Also, the company’s price earnings growth ratio of 1.34 compares favorably with the industry average 1.40.
Other Stocks That Warrant a Look
Investors interested in the finance sector can also consider MarketAxess Holdings Inc. (MKTX - Free Report) , Total System Services Inc. , Visa Inc. (V - Free Report) .
MarketAxess is a leading multi-dealer trading platform that offers institutional investors access to global liquidity in products like U.S. high-grade corporate bonds, emerging markets and high-yield bonds, European bonds, U.S. agency bonds, credit derivatives and other fixed-income securities. The company had an average positive surprise of 7.26% in the last four quarters. The stock carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Total System Services provides electronic payment processing, merchant services and related services to financial and non-financial institutions in the U.S. and internationally. The company had an average positive surprise of 3.59% in the last four quarters. The stock carries a Zacks Rank #2 (Buy).
Visa operates retail electronic payments network worldwide. The company had an average positive surprise of 7.24% in the last four quarters. The stock carries a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>