A Look At Cboe Global Markets (CBOE) Valuation After Volatility Spike And Bitcoin Index Plans

Cboe Global Markets (CBOE) is back in focus after announcing plans to launch the Cboe IBIT Volatility Index for bitcoin options, just as geopolitical tensions push its flagship VIX gauge sharply higher.

See our latest analysis for Cboe Global Markets.

Cboe Global Markets’ share price has climbed to US$299.20, supported by a 9.45% 30 day share price return and a 20.59% year to date share price return. Its 1 year total shareholder return of 38.13% and 5 year total shareholder return of 205.72% point to longer term momentum alongside record trading volumes, higher VIX readings and the upcoming bitcoin volatility index launch.

If this kind of volatility story has your attention, it could be a good moment to look across the market at 19 cryptocurrency and blockchain stocks identified by the Simply Wall St screener.

Yet with Cboe trading around US$299.20 after recent returns and upbeat earnings headlines, the key question is whether today’s price already reflects that momentum, or if the market is still underestimating its future growth potential.

Price to Earnings of 28.6x: Is It Justified?

Cboe Global Markets is trading on a P/E of 28.6x, which sits below the 32.3x average for its direct peers but above the broader US Capital Markets industry average of 21.8x and the SWS estimated fair P/E of 14.5x.

The P/E ratio compares the current share price with earnings per share, so you can think of it as how many dollars the market is willing to pay for each dollar of Cboe’s earnings. For an exchange group with established profitability and high quality earnings, this multiple often reflects how confident investors are in the durability of those earnings and any future growth.

Here, the picture is mixed. On one hand, Cboe’s recent earnings growth has been strong, with 43.9% growth over the past year and 21.6% per year over the past 5 years, and current net profit margins of 23.2% are higher than last year’s 18.6%. On the other hand, earnings are forecast to grow 5.7% per year, slower than the wider US market at 15.6% per year, and the estimated fair P/E of 14.5x is materially lower than the current 28.6x multiple. This suggests a level the market could move towards if expectations cool.

Against the broader industry, Cboe looks expensive, given its 28.6x P/E versus the 21.8x industry average, and especially against the 14.5x fair ratio estimate that implies investors are paying roughly double what that model indicates for each dollar of earnings.

Explore the SWS fair ratio for Cboe Global Markets

Result: Price-to-Earnings of 28.6x (OVERVALUED)

However, slower forecast earnings growth compared to the wider US market, along with Cboe trading above the SWS fair P/E estimate, could both challenge the current momentum story.

Find out about the key risks to this Cboe Global Markets narrative.

Another View Using Cash Flows

Price multiples suggest Cboe looks expensive, but our DCF model offers a slightly different perspective in a more cash-focused way. On that view, the estimated future cash flow value is US$264.78 per share versus today’s US$299.20 price, so the stock screens as overvalued here too. Which signal do you weigh more heavily?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Cboe Global Markets for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 46 high quality undervalued stocks. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Next Steps

Given the mix of risks and rewards you have seen so far, it makes sense to move quickly, review the data in full and weigh up 2 key rewards and 1 important warning sign for yourself.

Looking for more investment ideas?

If you stop here, you only see one corner of the market. Use the Simply Wall St screener to spot other opportunities that might fit your style.

• Target potential value opportunities by scanning our 46 high quality undervalued stocks that combine quality fundamentals with attractive pricing signals.
• Strengthen your income focus by reviewing 14 dividend fortresses that offer higher yields with an emphasis on sustainability.
• Prioritise capital preservation by checking 63 resilient stocks with low risk scores designed to highlight companies with lower overall risk profiles.

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.

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