CBOE Holdings Inc.
) reported second-quarter 2014 operating earnings of 50 cents per
share, which lagged the Zacks Consensus Estimate by a penny and the
year-ago figure of 54 cents by 7.4%. With this result, the
company's average four-quarter beat stands at 3.6%.
Cboe Holdings, Inc - Quarterly EPS (BNRI) |
The company's operating net income declined 10% year over year
to $43 million. Including extraordinary items in the prior-year
quarter, reported net income decreased to $43 million or 50 cents a
share from $46.2 million or 52 cents per share in the year-ago
Total operating revenue fell 5% year over year to $143.9 million
and was in line with the Zacks Consensus Estimate. The decline in
revenues were due to
of $97.9 million (down 7.7% year over year),
of $14.9 million (down 0.7%),
of $9.7 million (down 6.7%) and
revenue of $3.9 million (down 7.1%). These were partially offset by
an increase in
exchange services and other fees
of $9.7 million (up 4.3%) and
market data fees
of $7.8 million (up 36.8%).
Average daily volume decelerated 3% year over year to 4.83
million, whereas total trading volume fell 4% to $304.4 million,
primarily due to muted market volatility. Moreover, average revenue
per contract decreased 4% to 32.2 cents due to higher volume-based
incentives for some of the multiply-listed options along with a
shift in product-mix.
Total operating expenses edged down 1.6% year over year to $74.2
million. Adjusting for volume-based expenses, depreciation and
amortization, accelerated stock-based compensation expense and
unusual or one-time expenses, core operating expenses dipped 2.2%
$48.5 million in the quarter. The decline primarily resulted from
lower employee costs and outside services, while other expenses
Core operating income decreased 10% year over year to $69.7
million. Core operating margin also deteriorated to 48.4% from
51.2% in the year-ago period. However, effective tax rate dipped to
38.1% from 38.4% in the year-ago quarter.
As of Jun 30, 2014, CBOE Holdings had cash and cash equivalents
of $145.1 million, down from $221.3 million at 2013-end. Total
assets stood at $385.8 million at the end of Jun 2014, down from
$441.6 million at 2013-end.
Meanwhile, long-term liabilities were $52.9 million, up from
$49.6 million at 2013-end, although total shareholder equity fell
to $263.9 million from $284.5 million at 2013-end. However,
operating cash flow improved 3.7% year over year to $121.2 million
at the end of Jun 2014.
Share Repurchase Update
CBOE Holdings repurchased about 1.0 million shares for $51.1
million during the reported quarter. Moreover, shares worth $230.3
million have been purchased since the inception of the share
buyback program in 2011.
On Jul 30, 2014, the board of CBOE Holdings sanctioned the
repurchase of an additional $100 million worth of common stock.
This has expanded the previous repurchase program of $100 million
announced in Dec 2013.
Including shares remaining from the previous authorization, the
company had about $150.2 million shares available for buybacks at
the end of Jul 2014.
Concurrently, CBOE Holdings lowered its expense outlook for
2014. Core operating expense is projected to be $186-190 million in
2014, down from prior estimate of $191-196 million. Depreciation
and amortization expense was reiterated within the $38-40 million
Continuing stock-based compensation expense, included 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 Jul 30, 2014, the board of CBOE Holdings hiked its regular
quarterly dividend by 17% to 21 cents per share from the prior
payout of 18 cents. The raised dividend is payable on Sep 19, 2014,
to shareholders of record on Aug 29.
On Jun 20, 2014, the company paid a regular quarterly dividend
of 18 cents per share to shareholders of record as on May 30.
Other Stocks to Consider
CBOE Holdings carries a Zacks Rank #5 (Strong Sell) at present.
However, some better-ranked financial stocks like Ladder Capital
), Moody's Corp. (
) and Ace Ltd. (
), all bearing a Zacks Rank #2 (Buy), are worth considering.
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CBOE HOLDINGS (CBOE): Free Stock Analysis
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