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Cboe Global (CBOE) Volumes Solid, Q3 RPC View Mixed

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Cboe Global Markets, Inc. (CBOE - Free Report) reported solid average daily volume (ADV) for September 2018. Total ADV of 7.3 million contracts increased 3.1% year over year. The same improved 2.6% over August 2018 figure.

Total contracts for August were 137.8 million, decreasing 2% year over year. Of this, Options contracts slipped 1.3% to 133.2 million while futures contracts plunged 20.1% to 4.6 million. However, Options ADV of 7 million grew 3.9% but Futures ADV was 0.2 million dropped 15.9%.

Subsequently, ADV of the U.S. Equities Matched came in at 1.1 billion shares, dipping 3.2% year over year. However, European Equities Matched reflected a 22.5% rise year over year to €10.2 billion whereas Global FX Matched climbed 8% to nearly $35.8 billion.

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 70% of total operating revenues in 2017.

Concurrently, the company expected third-quarter average revenue per contract (RPC) for total Options to be in line with 24.5 cents reported for a two-month period ending Aug 31, 2018. While RPC for index options is estimated to be 1.5-2.5% lower than two-months’ average, attributable to a better mix of VIX options contracts in September. However, RPC for multiply-listed options is projected to be 2-3% higher than the two-month average. Also, RPC for Futures is predicted to be 1-2% higher than the same, reflecting an impact of fee changes implemented on Aug 1.

Shares of CBOE Global Markets have underperformed the industry year to date. The stock has lost 23.4% versus the industry’s rally of 14.9%. Nonetheless, the company’s solid market position and a global reach with diversified portfolio and strength in its proprietary products, primarily SPX options, VIX options and VIX futures, should help the shares trend higher.



Cboe Global is set to report third-quarter results on Nov 2. The Zacks Consensus Estimate for quarterly earnings is pegged at $1.48, reflecting a year-over-year increase of 24.4% on 6.3% higher revenues. Our proven model does not conclusively show that the company is likely to beat on earnings this time around. While a Zacks Rank #2 (Buy) increases the predictive power of ESP, an Earnings ESP of -1.00% leaves surprise prediction inconclusive. The company delivered positive surprises in the last two quarters.

Recently, securities exchanges, namely CME Group Inc. (CME - Free Report) , Intercontinental Exchange, Inc. (ICE - Free Report) and MarketAxess Holdings Ltd. (MKTX - Free Report) also reported respective volumes. While CME Group’s September ADV of 17.5 million contracts per day grew 3% year over year, Intercontinental’s improved 19% year over year in Agriculture and Metals ADV, rising to 0.5 million contracts. MarketAxess has reported a trading volume of $136.6 billion for the month.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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