Cboe Global Markets, Inc. CBOE shares have gained 9.1% in the year-to-date period, outperforming the industry's growth of 8.7%, the Finance sector’s return of 3.5% and the Zacks S&P 500 composite’s decline of 0.9%. With a market capitalization of $22.30 billion, the average volume of shares traded in the last three months was 0.7 million. CBOE has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 1.81%.

CBOE Outperforms Industry, Sector, S&P

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CBOE Trading Above 50-Day and 200-Day Moving Averages

Shares of Cboe Global closed at $213.100 on Thursday and is trading above the 50-day and 200-day simple moving averages (SMA) of $202.15 and $197.72, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

CBOE’s Growth Projection Encourages

The Zacks Consensus Estimate for Cboe Global’s 2025 earnings per share indicates a year-over-year increase of 4.1%. The consensus estimate for revenues is pegged at $2.18 billion, implying a year-over-year improvement of 5.1%. 

The consensus estimate for 2026 earnings per share and revenues indicates an increase of 7.6% and 5.3%, respectively, from the corresponding 2024 estimates. 

Earnings have grown 11.4% in the past five years, better than the industry average of 8.8%. The expected long-term earnings growth rate is 13.4%, outperforming the industry average of 9%.

Factors Impacting CBOE

Cboe Global’s organic strength lies in a diversified business mix that ensures uninterrupted revenue generation and recurring non-transaction revenues. We estimate the 2026 top line to witness a three-year CAGR of 6.2%. 

CBOE Global remains on track to grow its recurring non-transaction revenues. Increases in access and capacity fees and proprietary market data fees are likely to boost Data Vantage’s net revenues. Data Vantage is well-positioned to perform well in 2025. CBOE estimates Data Vantage organic net revenue growth to be in the mid to high single-digit range in 2025.

The company achieved a greater global breadth of services and products, as well as new distribution channels, apart from generating revenues and cost synergies through strategic buyouts.

Banking on operational expertise, the company has been strengthening its balance sheet by improving its cash position and lowering its debt balance. Its leverage ratio, as well as the times interest earned, compares favorably with the industry average.

CBOE’s strategic investments are well supported by solid capital management. However, higher expenses remain a major concern. 

Cboe Global has been facing intense competition due to increased market consolidation that tends to reduce market share, and this includes both product and price competition.

The company’s investment in European, Canadian and Asia Pacific operations remains exposed to volatility in currency exchange rates through translation of net assets or equity to U.S. dollars. The company is also exposed to credit risk from third parties, including customers, counterparties and clearing agents.

CBOE Shares are Undervalued

Cboe Global shares are trading at a discount to the Zacks Securities and Exchange industry. Its forward price-to-earnings of 23.43X is lower than the industry average of 24.41X.

Shares of Intercontinental Exchange Inc. ICE are trading at a multiple higher than the industry average, while Nasdaq, Inc. NDAQ and CME Group Inc. CME shares are trading at a discount.

Conclusion

Cboe Global’s growth strategy of expanding its product line across asset classes, broadening geographic reach, diversifying the business mix with recurring revenues and leveraging technology reflects its operational expertise. 
Its wealth distribution remains impressive. CBOE increased dividends for 13 straight years and has $679.8 million left under its current share repurchase authorization. Its discounted valuation also raises hope.

Thus, it is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research