CBOE Outperforms Industry, Trades at a Discount: How to Play the Stock

Shares of Cboe Global Markets, Inc. CBOE have gained 19.8% in the past year, outperforming the industry's growth of 6%, the Finance sector’s return of 18.6% and the Zacks S&P 500 composite’s appreciation of 18.4%. Cboe Global has outperformed its peers, including Intercontinental Exchange Inc. ICE, S&P Global Inc. SPGI and OTC Markets Group Inc. OTCM. Shares of ICE and OTCM have gained 5.4% and 14.9%, respectively, while SPGI has lost 4.7% in the past year.Image Source: Zacks Investment ResearchWith a market capitalization of $25.43 billion, the average volume of shares traded in the last three months was 0.8 million. CBOE has a solid track record of beating earnings estimates in three of the last four quarters, while missing in one, with an average of 1.89%.CBOE Shares are UndervaluedCboe Global shares are trading at a discount to the Zacks Securities and Exchange industry. Its forward price-to-earnings of 24.26X is lower than the industry average of 24.30X.Image Source: Zacks Investment ResearchCBOE Trading Above 50-Day and 200-Day Moving AveragesShares of Cboe Global closed at $243.19 on Wednesday and are trading above the 50-day and 200-day simple moving averages (SMA) of $241.27 and $221.09, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.Image Source: Zacks Investment ResearchCBOE’s Growth Projection EncouragesThe Zacks Consensus Estimate for Cboe Global’s 2025 earnings per share indicates a year-over-year increase of 11.7%. The consensus estimate for revenues is pegged at $2.28 billion, implying a year-over-year improvement of 9.9%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 5.7% and 4.1%, respectively, from the corresponding 2025 estimates. The long-term earnings growth is expected to be 13.8%, better than the industry average of 10.4%. Earnings have grown 11.4% in the past five years, better than the industry average of 9.6%.Average Target Price for CBOE Suggests UpsideBased on short-term price targets offered by 15 analysts, the Zacks average price target is $246.73 per share. The average suggests a potential 2.6% upside from the last closing price.Image Source: Zacks Investment ResearchFactors Impacting CBOECboe Global’s organic strength lies in a diversified business mix that ensures uninterrupted revenue generation and recurring non-transaction revenues. CBOE 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.End NotesCboe 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 as of June 30, 2025, the company had $614.5 million of availability remaining under its existing share repurchase authorizations. 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.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intercontinental Exchange Inc. (ICE): Free Stock Analysis Report Cboe Global Markets, Inc. (CBOE): Free Stock Analysis Report OTC Markets Group Inc. (OTCM): Free Stock Analysis Report S&P Global Inc. (SPGI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks