CBOE Holdings, Inc. (CBOE - Free Report) remains poised for growth riding on a diversified product portfolio and expansion moves. The Zacks Rank #2 (Buy) options exchange looks promising, banking on a number of growth drivers.
An Outperformer: CBOE Holdings’ shares have surged 25.24% year to date, outperforming the Zacks categorized Securities and Exchanges industry’s gain of 13.85%. The shares have also outperformed the S&P 500, increasing 9.29% over the same time frame.
Positive Earnings Surprise History: CBOE Holdings has surpassed the Zacks Consensus Estimate in the last three quarters. The company’s average four-quarter surprise is +7.2%.
Positive Growth Projections: The Zacks Consensus Estimate for earnings is $3.37 per share on revenues of $987.2 million for 2017. While the top line reflects year-over-year increase 53.0%, the bottom line improves 39.2%. For 2018, the Zacks Consensus Estimate for earnings is pegged at $3.85 on $1.12 billion revenues. While earnings represent 14.4% increase, revenues reflect a 13.4% rise.
CBOE Holdings’ has long-term expected earnings per share growth of 16.4%, better than the industry average of 11.4%.
North Bound Estimates: The Zacks Consensus Estimate for 2017 has moved up 2.1% in the last 60 days, while the same for 2018 has scaled up 1.6% over the same time frame.
Growth Drivers in Place
Organic growth remained a key strength at CBOE Holdings, reflected through its continuous revenue improvement. Transaction fees, which accounts for over 72% of the total revenue, continues to be backed by trading volume growth.
Given its strong market position and a global reach with strength in its proprietary products, primarily SPX options, VIX options and VIX futures, we expect the revenue increase to retain its momentum.
The company’s inorganic story remains impressive with its strategic buyouts. With the latest buyout of Bats Global Markets, CBOE Holdings’ pan-European equities and global FX positions strengthened.
CBOE Holdings anticipates to achieve $50 million in annualized expense synergies within three years of the acquisition. The metric is expected to increase to $65 million within five years of the transaction’s closure, Of these, the company estimates $20 million in GAAP run rate synergies for 2017.
CBOE Holdings enjoys a strong liquidity position despite cash outlays. The company effectively deploys its capital. It has more than doubled its quarterly dividend since 2010, increasing it every year.
Stocks to Consider
Other top-ranked stocks from the finance sector are Intercontinental Exchange, Inc. (ICE - Free Report) , Total System Services Inc. (TSS - Free Report) and Progressive Corp. (PGR - Free Report)
Progressive provides personal and commercial property-casualty insurance, and other specialty property-casualty insurance and related services primarily in the U.S. The company delivered positive surprises in two of the last four quarters with an average beat of 4.95%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank 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 delivered an average positive surprise of 3.59% in the last four quarters. The stock carries a Zacks Rank #2.
Intercontinental Exchange operates a network of global futures, equity and equity options exchanges, as well as global clearing and data services throughout financial and commodity markets. The company delivered positive surprises in three of the last four quarters with an average beat of 1.44%.The stock carries a Zacks Rank #2.
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