CBOE Holdings Inc.
) reported first-quarter 2014 operating earnings of 58 cents per
share, which modestly outpaced the Zacks Consensus Estimate of 55
cents per share and the year-ago figure of 50 cents. Accordingly,
operating net income grew 14% year over year to $50 million.
Including extraordinary items, reported net income escalated
to $48.5 million or 56 cents a share from $41.8 million or 48
cents per share in the year-ago quarter.
Total operating revenue jumped 11% year over year to $157.9
million and outbeat the Zacks Consensus Estimate of $156 million.
Higher revenues were driven by transaction fees of $112.8 million
(up 13.8% year over year), exchange services and other fees of
$9.5 million (up 4.4%), market data fees of $7.2 million (up
30.9%) and regulatory fees of $9.9 million (up 2.1%). These were
partially offset by a decline in access fees of $15.2 million
(down 3.2%) and other revenue of $3.3 million (down 5.6%).
Average daily volume escalated 29% year over year to 5.62
million, whereas total trading volume spiked 31% to $342.8
million, driven by improvement across asset class. However,
average revenue per contract plunged 13% to 32.9 cents due to
higher volume-based incentives for some of the multiply-listed
options along with a shift in the product-mix.
Total operating expenses rose 4% year over year to $75.9
million. Adjusting for volume-based expenses, depreciation and
amortization, accelerated stock-based compensation expense and
unusual or one-time expenses, core operating expenses increased
5% to $73.3 million in the quarter. The increase primarily
resulted from higher employee costs, data processing,
depreciation and amortization, royalty fees and trading volume
Subsequently, core operating income jumped 16.5% year over
year to $84.6 million. Core operating margin improved to 53.6%
from 50.9% in the year-ago period. However, effective tax rate
rose to 39.9% from 38.3% in the year-ago quarter.
As of Mar 31, 2014, CBOE Holdings had cash and cash
equivalents of $199.1 million, down from $221.3 million at
2013-end. Total assets stood at $412.8 million at the end of Mar
2014, down from $441.6 million at 2013-end.
Meanwhile, long-term liabilities were $51.7 million, up from
$49.6 million at 2013-end, although total shareholder equity rose
to $286.7 million from $284.5 million at 2013-end. Consequently,
operating cash flow decreased 7.3% year over year to $88.3
million at the end of Mar 2014.
Share Repurchase Update
CBOE Holdings repurchased 0.7 million shares for $37.1 million
during the reported quarter. Moreover, shares worth $179.2
million have been purchased since the inception of the share
buyback program in 2011.
On Dec 10, 2013, the board of CBOE Holdings sanctioned the
repurchase of additional $100 million worth of common stock.
Including shares remaining from the previous authorization, the
company had about $120.8 million shares available for buybacks at
the end of Mar 2014.
Concurrently, CBOE Holdings reiterated its outlook for 2014.
Core operating expense is projected to rise by 3-5% over 2013 to
$191-196 million, primarily due to higher expenses from
regulatory services. Depreciation and amortization expense should
be within $38-40 million.
Continuing stock-based compensation expense, included in core
expenses, is expected to be about $13 million in 2014. Meanwhile,
effective tax rate is likely to be within 38.5-39.5%. Capital
expenditure is projected in the band of $47-50 million, higher
than $31.7 million in 2013.
On Apr 29, 2014, the board of CBOE Holdings announced a
regular quarterly dividend of 18 cents per share, which is
payable on Jun 20, 2014, to shareholders of record on May 30.
On Mar 21, 2014, CBOE Holdings paid a regular quarterly
dividend of 18 cents per share to shareholders of record as on
On Jan 17, 2014, the company paid a special dividend of 50
cents per share to shareholders of record on Jan 3.
CBOE Holdings carries a Zacks Rank #3 (Hold) at present.
However, some better-ranked financial stocks include
Euronet Worldwide Inc.
General Finance Corp.
State Auto Financial Corp.
), all of which sport a Zacks Rank #1 (Strong Buy).
CBOE HOLDINGS (CBOE): Free Stock Analysis
EURONET WORLDWD (EEFT): Free Stock Analysis
GENERAL FINANCE (GFN): Free Stock Analysis
STATE AUTO FINL (STFC): Free Stock Analysis
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