CBOE (CBOE) vs. Intercontinental Exchange (ICE) Head to Head Survey

CBOE (NASDAQ: CBOE) and Intercontinental Exchange (NYSE:ICE) are both large-cap financials companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, institutional ownership and analyst recommendations.

Institutional and Insider Ownership

84.1% of CBOE shares are held by institutional investors. Comparatively, 90.8% of Intercontinental Exchange shares are held by institutional investors. 1.9% of CBOE shares are held by insiders. Comparatively, 1.5% of Intercontinental Exchange shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares CBOE and Intercontinental Exchange’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CBOE $645.11 million 21.85 $185.72 million $1.85 67.16
Intercontinental Exchange $5.96 billion 7.08 $1.42 billion $2.75 26.21

Intercontinental Exchange has higher revenue and earnings than CBOE. Intercontinental Exchange is trading at a lower price-to-earnings ratio than CBOE, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares CBOE and Intercontinental Exchange’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CBOE 10.55% 14.70% 7.83%
Intercontinental Exchange 27.91% 11.01% 2.18%

Dividends

CBOE pays an annual dividend of $1.08 per share and has a dividend yield of 0.9%. Intercontinental Exchange pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. CBOE pays out 58.4% of its earnings in the form of a dividend. Intercontinental Exchange pays out 29.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. CBOE has increased its dividend for 3 consecutive years. Intercontinental Exchange is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and price targets for CBOE and Intercontinental Exchange, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CBOE 0 6 4 0 2.40
Intercontinental Exchange 0 2 6 0 2.75

CBOE presently has a consensus price target of $109.50, indicating a potential downside of 11.87%. Intercontinental Exchange has a consensus price target of $72.38, indicating a potential upside of 0.42%. Given Intercontinental Exchange’s stronger consensus rating and higher probable upside, analysts clearly believe Intercontinental Exchange is more favorable than CBOE.

Risk and Volatility

CBOE has a beta of 0.49, suggesting that its share price is 51% less volatile than the S&P 500. Comparatively, Intercontinental Exchange has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500.

Summary

Intercontinental Exchange beats CBOE on 11 of the 17 factors compared between the two stocks.

CBOE Company Profile

Cboe Global Markets, Inc., formerly CBOE Holdings, Inc., is a holding company. The Company provides trading and investment solutions to investors around the world. It offers trading across a diverse range of products in multiple asset classes and geographies, including options, futures, United States and European equities, exchange-traded products (ETPs), global foreign exchange (FX) and multi-asset volatility products based on the Cboe Volatility Index (VIX Index). The Company’s trading venues include the options exchange in the United States and the stock exchange in Europe. Its products include VIX Index & Volatility, stock exchange options, options on single stocks and exchange traded products, Mini Options, Weeklys Options, Strategy Benchmark Indexes, Social Media Indexes, Contract Specs and Trading Hours and Trader Incentive Programs.

Intercontinental Exchange Company Profile

Intercontinental Exchange Inc, formerly IntercontinentalExchange Group, Inc., is a network of regulated exchanges and clearing houses for financial and commodity markets. The Company delivers transparent and accessible data, technology and risk management services to markets around the world through its portfolio of exchanges, including the New York Stock Exchange, ICE Futures, Liffe and Euronext. In February 2014, the Company completed the acquisition of Singapore Mercantile Exchange. In July 2014, Intercontinental Exchange Inc sold its Wombat Financial Software, a unit of NYSE Technologies. Effective September 10, 2014, Intercontinental Exchange Inc acquired an undisclosed majority interest in Holland Clearing House NV.

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