CBOE GLOBAL MARKETS INC (NYSEARCA:CBOE) – A Quality Stock with Strong Fundamentals

CBOE GLOBAL MARKETS INC (NYSEARCA:CBOE) was identified as a potential quality investment through our Caviar Cruise stock screener. The company demonstrates strong profitability, efficient capital allocation, and healthy financials, making it a candidate for long-term investors focused on high-quality businesses. Below, we examine why CBOE fits the criteria for quality investing.

Key Strengths of CBOE

• High Return on Invested Capital (ROIC): CBOE’s ROIC (excluding cash and goodwill) stands at 102.87%, well above the 15% threshold required by the Caviar Cruise screen. This indicates the company generates substantial returns from its capital investments.
• Strong EBIT Growth: Over the past five years, CBOE’s EBIT grew at a 15.05% annual rate, outpacing its revenue growth of 4.97%, a sign of improving operational efficiency.
• Low Debt Burden: The company’s debt-to-free cash flow ratio is 1.37, meaning it could repay all its debt in under 1.5 years using current cash flows—a sign of financial stability.
• Exceptional Profit Quality: CBOE’s five-year average profit quality (free cash flow to net income) is 186.2%, far exceeding the 75% benchmark, indicating strong cash conversion.

Fundamental Analysis Summary

Our fundamental report assigns CBOE a score of 6 out of 10, with standout ratings in profitability (8/10) and financial health (8/10). Key takeaways:

• Profitability: High ROIC, ROE, and consistent earnings growth.
• Valuation: Currently priced at a premium (P/E of 25.33), but justified by strong fundamentals.
• Dividend: A modest yield of 1.28%, but with an 11.94% annual growth rate over the past decade.

For investors seeking stable, high-quality businesses, CBOE’s strong operational performance and financial discipline make it worth further consideration.

Our Caviar Cruise screener lists more quality stocks and is updated daily.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.