On May 22, 2013, Zacks Investment Research upgraded
CBOE Holdings Inc.
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
CBOE's earnings estimates have been gaining traction on the
back of improved first-quarter 2013 results. Moreover, the
company's strong operating cash and enhanced liquidity pave the
way for investments aimed at long-term growth as well as for
effective capital deployment. Additionally, this options exchange
delivered positive earnings surprises in all of the last 4
quarters with an average beat of 7.4%.
On May 3, CBOE reported first-quarter 2013 operating earnings
per share of 50 cents, which exceeded the Zacks Consensus
Estimate of 47 cents and the year-ago quarter number of 37
The year-over-year upside was primarily attributable to 18%
growth in operating revenues, driven by higher index and future
volumes along with escalated transaction fee and rate per
contract. This was partially offset by a 10% hike in adjusted
operating expenses. Subsequently, adjusted operating margin
improved to 50.9% from 47.5% in the year-ago quarter. As well,
operating cash flow surged 50.6% year over year to $95.3
The steady performance supported the reaffirmation of the
company's guidance for 2013. CBOE's innovative initiatives in the
options and futures spheres are gaining traction. Going ahead,a
high earnings visibility, strong product portfolio, consistent
cash generation, disciplined investment and limited balance-sheet
risk should enable CBOE to be one of the most dynamic companies
in the industry, once the economic volatility stabilizes.
Based on CBOE's fundamental strength, the Zacks Consensus
Estimate for 2013 rose 3.1% to $1.97 per share in the last 30
days. The estimate for 2014 is pegged at $2.22, up 3.3% in the
last 30 days. Meanwhile, no downward revision in estimates was
witnessed for both the years.
Moreover, the Most Accurate Estimate for Markel's 2013
earnings stands at $2.00 a share, resulting in a positive
Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) of 1.5%.
Other Stocks to Consider
Apart from CBOE, other stocks that are outperforming in the
financial sector include
XL Group Plc
Validus Holdings Ltd.
Fleetcor Tech Inc.
). All the stocks carry a Zacks Rank #1 (Strong Buy).
CBOE HOLDINGS (CBOE): Free Stock Analysis
FLEETCOR TECH (FLT): Free Stock Analysis
VALIDUS HOLDING (VR): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
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