What recent returns tell you about Cboe Global Markets (CBOE)

Cboe Global Markets (CBOE) has drawn fresh attention after a period of solid share price gains, with the stock showing positive returns over the past week, month, past 3 months and year.

Over the past week the stock returned 2.1%, with a similar 2.1% move over the past month. The past 3 months show a 12.1% return, while the 1 year total return stands at 39.1%.

In the longer term, Cboe’s total return is 124.4% over 3 years and 202.6% over 5 years. The shares most recently closed at US$295.95, with a market value of about US$31.0b.

That pattern of a 12.1% 3 month share price return alongside a 39.1% 1 year total shareholder return suggests momentum has been building recently, as markets reassess Cboe’s growth potential and risk profile around its US$295.95 share price.

If Cboe’s recent gains have you thinking about where else capital might work hard, this is a good moment to scan opportunities in market infrastructure and trading related businesses through the 18 top founder-led companies

With Cboe trading close to its analyst price target and showing strong multi year returns, the key question is whether today’s valuation leaves upside on the table or if the market is already pricing in future growth.

Most Popular Narrative: 3% Overvalued

The most followed narrative places Cboe’s fair value at about $287 per share, slightly below the recent $295.95 close. This frames the current rally as modestly ahead of that model.

Cboe is experiencing broad-based growth across derivatives, data, and global spot markets, positioning it to benefit from ongoing increases in electronic trading volume and automation; these trends are likely to drive higher transaction-based revenue and support further top-line growth.

There is a structural tailwind from expanding retail investor participation especially in options and through digital investment platforms which is fueling record adoption of SPX 0DTE options and could materially increase both trading volumes and net revenues.

Want to see what sits behind that $287 fair value marker? The narrative leans heavily on how revenue, margins and the future earnings multiple fit together. You can also examine which assumptions contribute most to that model and how sensitive they are to trading volumes and profitability.

Result: Fair Value of $287 (OVERVALUED)

However, you should also keep an eye on Cboe’s dependence on S&P index partnerships, as well as the risk that higher tech and expansion spending pressures margins if growth disappoints.

Another Angle on Cboe’s Valuation

The earlier narrative frames Cboe as about 3% overvalued at $295.95 versus a fair value near $287 using earnings forecasts and a future P/E. On current numbers though, the picture is mixed. Cboe trades on a 28.3x P/E, which is below both the US Capital Markets industry at 39.1x and the 30.5x peer average, but above a fair ratio of 13.7x.

That gap suggests the market is already paying a premium to where the fair ratio indicates the P/E could move, even if Cboe still appears cheaper than many direct competitors on headline multiples. The key question is how much valuation risk an investor is comfortable taking on at this level.

Next Steps

Given the mix of optimism and concern throughout this article, now is a good time to review the numbers yourself, decide how they stack up against your expectations, and then weigh the 3 key rewards and 1 important warning sign.

Looking for more investment ideas?

If Cboe has sharpened your focus, do not stop here; widen your watchlist with a few targeted sets of stocks that match different goals and risk levels.

• Target potential mispricings by scanning a curated group of companies that look cheaper than their fundamentals suggest through the 58 high quality undervalued stocks.
• Strengthen your focus on cash returns by reviewing companies that prioritize regular payouts and robust yields with the 11 dividend fortresses.
• Dial down your overall risk by checking businesses that pair steadier profiles with resilient metrics using the 72 resilient stocks with low risk scores.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.