CBOE Stock Rises 9.1% YTD: A Signal for Investors to Hold Tight?

Core Insights - Cboe Global Markets, Inc. (CBOE) shares have increased by 9.1% year-to-date, outperforming the industry growth of 8.7%, the Finance sector's return of 3.5%, and the Zacks S&P 500 composite's decline of 0.9% [1] - The company has a market capitalization of $22.30 billion and an average trading volume of 0.7 million shares over the last three months [1] Performance Metrics - CBOE has a solid track record of beating earnings estimates in three of the last four quarters, with an average beat of 1.81$2.18 billion, reflecting a 5.1% improvement [4] - Earnings have grown by 11.4% over the past five years, surpassing the industry average of 8.8%, with a long-term earnings growth rate expected at 13.4% compared to the industry average of 9% [5] Business Strengths - Cboe Global's diversified business mix supports uninterrupted revenue generation and recurring non-transaction revenues, with a projected three-year CAGR of 6.2% for the 2026 top line [6] - The company is expected to see growth in recurring non-transaction revenues, particularly from increases in access and capacity fees and proprietary market data fees [7] - CBOE has expanded its global services and products, generating revenue and cost synergies through strategic acquisitions while improving its cash position and reducing debt [8] Competitive Landscape - CBOE faces intense competition due to market consolidation, which can reduce market share through both product and price competition [9] - The company’s investments in international operations are subject to currency exchange rate volatility and credit risk from third parties [10] Valuation and Strategy - Cboe Global shares are currently trading at a forward price-to-earnings ratio of 23.43X, lower than the industry average of 24.41X, indicating a potential undervaluation [11] - The company has a growth strategy focused on expanding its product line, broadening geographic reach, and diversifying its business mix with recurring revenues [12] - CBOE has increased dividends for 13 consecutive years and has $679.8 million remaining under its current share repurchase authorization [12]