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Wondering if Cboe Global Markets at around US$294.82 is offering fair value or if expectations have already been priced in? This article walks through the key signals to help you frame that question.
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The stock has recent returns of 1.7% over 7 days, 3.8% over 30 days, 18.8% year to date and 38.6% over the last year, which can influence how much risk or upside you feel is already reflected in the share price.
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Recent news flow around Cboe Global Markets has focused on its role as a major exchange operator and how investors are thinking about trading volumes, product mix and competitive position. This broader context can help explain why the stock price has moved the way it has in recent months.
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Cboe Global Markets currently has a valuation score of 2 out of 6. This means it screens as undervalued on 2 of the 6 checks that will be unpacked using several common valuation approaches, with an even more comprehensive way to think about value coming at the end of the article.
Cboe Global Markets scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Excess Returns model looks at how much profit a company is expected to generate over and above the return that shareholders require, based on the equity cost. It values the business by capitalising these excess profits on top of its book value per share.
For Cboe Global Markets, the current Book Value is $49.10 per share and the Stable EPS is $14.44 per share, based on weighted future Return on Equity estimates from 5 analysts. The Cost of Equity is $5.10 per share, which implies an Excess Return of $9.33 per share that is treated as value created beyond the required return. The Average Return on Equity sits at 22.08%, and the Stable Book Value used in the model is $65.40 per share, sourced from weighted future Book Value estimates from 2 analysts.
On this basis, the Excess Returns model arrives at an intrinsic value of about $277.80 per share. Against the current share price of around $294.82, this implies the stock is about 6.1% overvalued, which is a relatively small gap.
Result: ABOUT RIGHT
Cboe Global Markets is fairly valued according to our Excess Returns, but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
P/E is a common way to value profitable companies because it compares what you pay per share with the earnings that each share produces. In general, higher growth expectations and lower perceived risk can justify a higher P/E, while slower growth or higher risk usually point to a lower, more conservative P/E as being “normal” for a stock.
Cboe Global Markets currently trades on a P/E of 28.21x. That sits below the Capital Markets industry average P/E of 39.36x and also below the peer group average of 30.95x, so the stock is not at the high end of its sector on this metric. However, simple comparisons like this do not factor in company specific growth, profitability or risk.
This is where Simply Wall St’s Fair Ratio comes in. The Fair Ratio for Cboe Global Markets is 13.74x, which is the P/E level suggested after adjusting for items such as earnings growth, industry, profit margins, market cap and risk profile. Because it is tailored to the company’s fundamentals, the Fair Ratio aims to be more informative than a straight comparison to peers or industry averages. With the current P/E of 28.21x sitting well above the Fair Ratio of 13.74x, the shares screen as overvalued on this approach.
Result: OVERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies.
Earlier it was mentioned that there is an even better way to understand valuation. Narratives are a simple way for you to write the story behind your numbers by linking your view on Cboe Global Markets, your assumptions for future revenue, earnings and margins, and the fair value you think is reasonable.
On Simply Wall St’s Community page, Narratives let you connect that story directly to a forecast and a fair value estimate. You can then compare it with the current share price to help you decide whether the gap between price and value looks wide enough for you to consider buying, holding or selling.
Narratives are updated automatically when new information such as news or earnings is added. This means your story does not stay static while the numbers move in the background.
For example, one Cboe Global Markets Narrative uses a DCF fair value of about US$201.42 per share while another uses a DCF fair value of about US$1,122.96 per share. This shows how different investors can look at the same company, plug in different growth, margin and discount rate assumptions, and arrive at very different conclusions about what the current price is really offering you.
Do you think there’s more to the story for Cboe Global Markets? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include CBOE.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
