CBOE Holdings Poised For Growth Despite Stiff Competition

On Jul 4, 2016, we issued an updated research report on CBOE Holdings, Inc. (NASDAQ:CBOE) .

CBOE Holdings remains on its growth trajectory with a diversified product portfolio and core competencies. Moreover, the insurer has been strengthening its position in the futures business. The company’s S&P 500 index, SPX options continue to improve.

The company announced its intention to open its first international business development office in London this July. This will not only enable it to expand its operations but will also strengthen its foothold in the region. In addition, the new location will allow the company’s business development team to directly interact with Europe-based clients, potential new clients, along with its own strategic partners.

Further, the company listed options on two additional FTSE Russell Indexes – the FTSE 100 and the FTSE China 50 – on Mar 29, 2016. This move will enable the company’s investors to gain exposure to the largest and most liquid segments of the U.K. and Chinese equity markets. The new options will add to the international expansion of the company’s index options franchise, which began with the launch of Morgan Stanley (NYSE:MS) Capital International (MSCI) products. With the support of sustained marketing and educational efforts, the company anticipates early trading in its MSCI index products and expects to maintain this growth in the future.

The company has also been engaging in effective capital deployment via dividend hikes and share buybacks to enhance shareholders' value. The company has been hiking dividends regularly and has bought back about $484.9 million shares over the last five years. CBOE Holdings currently has shares worth $115.1 million remaining under its authorization.

With respect to earnings performance, the company delivered positive surprise in three of the last four quarters with an average of about 4.4%.

However, the company will continue to face stiff competition owing to increased market consolidation, which in turn tends to reduce market share and limit business leveraging. Also, industry volatility and sluggish credit quality raise concerns.

Moreover, the Zacks Consensus Estimate has also been revised downward in the last 60 days for both 2016 and 2017.

Zacks Rank and Stocks to Consider

Currently, CBOE Holdings carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the finance sector are Bats Global Markets (NYSE:BATS) , Argo Group International Holdings, Ltd. (NASDAQ:AGII) and Third Point Reinsurance Ltd. (NYSE:TPRE) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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 >>