On Sep 7, 2016, Zacks Investment Research downgraded CBOE Holdings Inc. (NASDAQ:CBOE) to a Zacks Rank #4 (Sell).
Why the Downgrade?
CBOE Holdings has been witnessing downward estimate revisions after reporting soft August numbers as well as lower-than-expected second-quarter 2016 earnings. Shares of this securities exchange have been on a downtrend of late. In fact, the stock dipped 0.6% since the company reported soft August volumes. Given its expected negative earnings growth rates for the upcoming quarter, we anticipate the stock to decline further.
CBOE Holdings’ average daily volume for August plunged 31% year over year to 4.1 million contracts, despite two extra trading days than the year-ago period. Total options contracts decreased 25% to 89.7 million and total futures contracts were down 26% to 4.8 million. Trading volumes across all verticals too declined in August.
With respect to its second-quarter results, the bottom line missed our expectations. Though revenues improved, increase in operating expenses offset the growth. This led to operating margin contraction. Management expects core operating expenses between $211 and $215 million for 2016. Also, cash and cash equivalents declined, whereas long-term liabilities increased over the 2015-end level. The company delivered back-to-back negative surprise with the second-quarter earnings miss.
The Zacks Consensus Estimate for 2016 and 2017 moved down as most of the estimates were revised lower in the last 60 days. The same moved south by 2% to $2.43 for 2016 and 1.5% to $2.68 for 2017.
Stocks to Consider
Not all finance stocks, however, are performing as poorly as CBOE Holdings. Some better-ranked stocks from the same space include Bats Global Markets (NYSE:BATS) , MarketAxess Holdings Inc (NASDAQ:MKTX) and Arbor Realty Trust Inc. (NYSE:ABR) , each carrying a Zacks Rank #2 (Buy).
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ARBOR RLTY TRST (ABR): Free Stock Analysis Report
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Zacks Investment Research