Riding a steady, week-long growth momentum, shares of CBOE Holdings Inc. (CBOE) scaled a new 52-week high of $63.66 on Dec 10. Notably, the stock has jumped 7.6% and 25.7% since the third-quarter earnings release on Oct 31 and the beginning of 2014, respectively. Subsequently, the company’s market capitalization also rose to about $5.3 billion from about $5 billion at the beginning of December.
While about 976.7K million shares exchanged hands in the latest trading session, the average volume of shares traded over the last three months stands at approximately 632.2K. Yesterday’s closing price represents a solid one-year return of about 22.8%, against 15.3% clocked by the Nasdaq index.
Volatility to Boost Volumes
Notably, the CBOE volatility index (VIX), which accounts for most of the volumes generation, has jumped about 34% this week. The ascent is driven by extreme precariousness that encompassed the market due to uncertainty in the global markets of Greece and Japan, along with the pressurized oil prices and interest rates in the U.S. After remaining historically low for most of the first half of 2014, the VIX shot up about 56% from 11.89 on Dec 5 to 18.53 on Dec 10 in the last four trading sessions, with improvement expected in the upcoming sessions as well.
Meanwhile, CBOE Holdings witnessed commendable recovery in its trading volumes as total average volumes at CBOE Futures Exchange (CFE) shored up 25% until October this year. Heightened volatility and expansion in global customer base also boosted average daily volumes for VIX Index futures by 18% year over year in the first nine months of 2014 and another 78% in Oct 2014.
While the VIX is based on implied volatility from the aforementioned factors, it largely impacts the dynamics of the derivative markets. Consequently, the bellwether of derivative industry, CME Group Inc. (CME), has been hitting new highs since the beginning of this month, peaking at $89.53 on Dec 10. Another close peer, MarketAxess Holdings Inc. (MKTX) hit a new 52-week high of $69.85 in the latest trading session, after steady appreciations in the last five sessions.
Additionally, this Zacks Rank #2 (Buy) stock generated earnings of 57 cents per share in third-quarter 2014, surpassing the Zacks Consensus Estimate by 3.6% and exceeding the year-ago figure by 21.3%. The long-term growth rate of CBOE Holdings is pegged at 14.8%, above peer group average of 14.1%.
While VIX still remains quite below the long-term average of 20, we believe there is ample scope for appreciation, which will further boost CBOE Holdings’ fundamentals and share price. Improved core growth from new products and expense management will further help the company retain its competitiveness amid industry giants like CME Group and Intercontinental Exchange Inc. (ICE).
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
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment