CBOE Global Boosts Shareholders' Value Through Share Buybacks

The board of directors of Cboe Global Markets, Inc. CBOE authorized an increase in its existing share repurchase program for returning more value to shareholders. This latest authorization will enable the company to buy back additional shares of up to $250 million. The increased authorization has left $347.6 million under the company’s existing share buyback program. Notably, this buyback program does not have an expiration date.

CBOE Global has bought back 1.9 million shares worth around $201.6 million year to date. Continued share buybacks are also likely to provide an additional upside to the company’s bottom line.

Not only share buybacks, CBOE Global also remains committed to boost shareholder value via dividend hikes. This Zacks Rank #2 (Buy) options exchange has increased dividends for nine straight years at a nine year CAGR of 14.9%. Its dividend yield of 1.4 % is in line with the industry average. This makes the stock an attractive pick for yield seeking investors.

A solid financial position over the years has enabled the company into prudent capital allocation that includes investing in several strategic growth initiatives. This month, it acquired New York-based Trade Alert, which is a real-time alerts and order flow analysis service provider. Last month, the company agreed to buy MATCHNow in its effort to venture into Canadian market. The buyout will also broaden the company’s North American equities business. We believe such efforts will also accelerate the pace of innovation by providing services that are highly complementary to its existing offerings. Effective capital deployment measures also indicate the company’s confidence in its future cash flow generating abilities.

Nasdaq, Inc. NDAQ from the same space has raised the quarterly dividend by 4% to 49 cents per share in April 2020 to boost shareholders value.

However, shares of CBOE Global have lost 6.2% in a year against the industry’s rise of 10.6%. Nevertheless, we believe the company’s compelling product portfolio, prudent buyouts and effective capital deployment strategies are likely to drive its shares in the days ahead.

Other Stocks to Consider

Some other top-ranked stocks in the same space are MarketAxess Holdings Inc. MKTX and Intercontinental Exchange, Inc. ICE. While MarketAxess sports a Zacks Rank #1 (Strong Buy), Intercontinental carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

MarketAxessoperates an electronic trading platform that enables fixed-income market participants to trade corporate bonds and other types of fixed-income instruments worldwide. It has a trailing four-quarter positive earnings surprise of 1.09%, on average.

Intercontinental Exchange is a global operator of regulated exchanges, clearing houses and listings venues, and a provider of data services for commodity, financial, fixed income and equity markets. It has a trailing four-quarter positive earnings surprise of 4.46%, on average.

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