Sasha Jovanovic
3 min read
Why Cboe Global Markets’ latest earnings matter for investors
Cboe Global Markets (CBOE) just posted third quarter and nine month results that showed higher revenue, net income, and earnings per share compared with the same periods a year earlier.
That earnings jump has arrived alongside a sharp rerating in the market’s view of Cboe Global Markets, with the share price up 24.1% over the past month and a 48.8% year to date share price return contributing to a 204.5% total shareholder return over five years. This suggests strong momentum rather than a short lived bounce at the current US$369.19 level.
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Bulls see Cboe Global Markets’ stronger recent earnings and big five year shareholder return as proof the higher share price is justified. Bears argue the rapid rerating already prices that in. Which side does the current valuation support?
Most Popular Narrative: 53% Overvalued
Cboe Global Markets last closed at $369.19, while the most popular narrative on Simply Wall St assigns a fair value of $241.95 using a 7.60% discount rate. This points to a meaningfully higher price than that narrative implies.
According to iStock, an investor in the Simply Wall St Community who wrote the narrative, the key inputs behind that fair value are long term revenue growth of 6.0%, a profit margin assumption of 19.8% and a 7.60% required return that together cap what they see as a reasonable valuation.
Based on this comprehensive analysis using appropriate risk adjusted discount rates, CBOE appears undervalued when using WACC based DCF methodology. The two stage DCF model with WACC provides the most accurate intrinsic value estimate of $657.85 per share, suggesting significant upside potential from current trading levels. The DDM serves as a conservative floor, while the DCF captures the full value creation potential of CBOE’s market leading exchange business.
See why 8 investors see Cboe Global Markets as 53% overvalued.
Result: Fair Value of $241.95 (OVERVALUED)
Still, Cboe Global Markets’ narrative could be shaken by weaker trading volumes or regulatory shifts that pressure fees, valuations, or assumptions about long term growth.
Find out about the key risks to this Cboe Global Markets narrative.
Next Steps
If the debate around Cboe Global Markets’ valuation feels split, that is the point. Investors only really learn by testing the numbers themselves. Start with the positives and see how they stack up against your own expectations by reviewing the 2 key rewards.
