Rating Change #5
CBOE Holdings Inc (CBOE) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Diversified Financial Services industry average. The net income increased by 1.7% when compared to the same quarter one year prior, going from $32.87 million to $33.42 million.
- CBOE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.51, which clearly demonstrates the ability to cover short-term cash needs.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Diversified Financial Services industry and the overall market, CBOE HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for CBOE HOLDINGS INC is rather high; currently it is at 54.20%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.50% significantly outperformed against the industry average.
- CBOE HOLDINGS INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, CBOE HOLDINGS INC increased its bottom line by earning $1.52 versus $0.98 in the prior year. This year, the market expects an improvement in earnings ($1.56 versus $1.52).
CBOE Holdings, Inc., through its subsidiaries, operates markets for the trading of listed options contracts. The company has a P/E ratio of 17.6, equal to the average financial services industry P/E ratio and equal to the S&P 500 P/E ratio of 17.7. CBOE has a market cap of $2.36 billion and is part of the financial sector and financial services industry. Shares are up 0.2% year to date as of the close of trading on Friday.You can view the full CBOE Ratings Report or get investment ideas from our investment research center.
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