Shares of CBOE Holdings Inc. (CBOE) have been riding on a strong growth momentum in all three trading sessions this week, scaling a new all-time 52-week high of $67.29 on Jan 7, 2015. The improved traction was based on the solid report of trading volumes released earlier this week.
This Zacks Rank #3 (Hold) stock’s price has increased about 6% since the beginning of 2015 only. Subsequently, the company’s market capitalization rose to about $5.67 billion from about $5 billion at the beginning of Dec 2014.
While about 520.2K million shares exchanged hands in the latest trading session, the average volume of shares traded over the last three months stands at approximately 625.5K. Yesterday’s closing price represents a solid one-year return of about 30%, against 13.3% clocked by the Nasdaq index.
Rationale
Despite a weak first-half 2014, CBOE Holdings witnessed laudable recovery in its trading volumes as total average volumes at CBOE Futures Exchange (CFE) escalated 26% year over year in 2014. Additionally, average daily volumes for VIX Index futures soared 27% in 2014, hitting new records for the fifth straight year. Growth was fuelled by amplified volatility and expansion in the global investor base.
Additionally, CBOE Holdings has delivered positive earnings surprises in three of the last four quarters, with an average beat of 3.4%. The company’s third-quarter 2014 operating earnings of 57 cents per share topped the Zacks Consensus Estimate by 3.6% and the year-ago figure by 21.3%.
Furthermore, an improved volumes outlook has prompted upward estimate revisions for 2015 earnings. The Zacks Consensus Estimate for 2015 rose by 2 cents to $2.59 per share in the last 7 days, while the same for 2014 remained intact at $2.26.
Moreover, with its fourth-quarter earnings scheduled to release before the opening bell on Feb 6, the Most Accurate estimate for CBOE Holdings’ 2014 and 2015 earnings currently stand at $ 2.28 and $2.61 a share, resulting in Earnings ESP of +0.9% and +0.8%, respectively. This reflects a steady growth momentum.
The long-term growth rate of CBOE Holdings is pegged at 14.8%, above the peer group average of 14.1%.
Key Picks in the Sector
Stocks like CME Group Inc. (CME), Markit Ltd. (MRKT) and MarketAxess Holdings Inc. (MKTX), each carrying a Zacks Rank #2 (Buy), are worth considering in the exchange sector.
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