On Jul 14, 2014, Zacks Investment Research downgraded
CBOE Holdings Inc.
) by a notch to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
CBOE Holdings has been witnessing downward estimate revisions
due to sluggish growth outlook, given the lack of any significant
growth catalyst and intense competition, which escalate operational
and financial risks.
Notably, volumes have deteriorated due to the extreme market
complacency posed by the CBOE volatility index (VIX), which
accounts for most of the volumes generation. While VIX is based on
implied volatility, it largely impacts the dynamics of the
The adverse effects of such skewed underlying forces and
seasonality issues are reflected in the ongoing industry
underperformance as well. Even the company is facing muted demand
as investors do not foresee any disturbing and uncertain events
that require protection.
Fluctuations have been witnessed in CBOE Holdings' average daily
volumes, when these rose only at a 4-year (2009-2013) CAGR of 1.1%,
reflecting declines in 2009, 2010 and 2012. While there was
improvement in 2013 and first-quarter 2014, weakness resurfaced in
May and June of 2014.
Additionally, this U.S. derivative exchange underperformed the
one-year Nasdaq index, which posed growth of 23.3% against merely
0.9% clocked by the company.
Meanwhile, the Zacks Consensus Estimate for 2014 and 2015
declined 4.3% and 3.8% to $2.20 and $2.55 a share, respectively, in
the last 60 days. No upward estimate revision was witnessed for
both these years.
Moreover, the Most Accurate estimate for CBOE Holdings' 2015
earnings currently stand at $2.49 a share, resulting in an
of -1.6%. This further reflects a slow growth momentum.
Other Worthy Financial Stocks
While we prefer to avoid CBOE Holdings for the time being,
better-ranked financial stocks like
VeriFone Systems Inc.
Total System Services Inc.
Apollo Residential Mortgage Inc.
) are worth considering. All these stocks sporta Zacks Rank #1
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
CBOE HOLDINGS (CBOE): Free Stock Analysis
APOLLO RES MTGE (AMTG): Free Stock Analysis
VERIFONE SYSTMS (PAY): Free Stock Analysis
TOTAL SYS SVC (TSS): Free Stock Analysis Report
To read this article on Zacks.com click here.