• If you are wondering whether Cboe Global Markets at around US$297 per share looks expensive or still offers value, a useful starting point is understanding how its current price lines up with different valuation tools.
• The stock recently closed at US$297.45, with returns of 6.0% over 30 days, 19.9% year to date, and 42.3% over the last year. These moves can influence how the market views both its potential and its risks.
• Over the past few months, investors have focused on Cboe Global Markets as one of the larger players in global exchanges and trading infrastructure. News coverage has frequently highlighted its role in key equity and options markets. That attention helps explain why the stock's 3 year and 5 year returns of 124.1% and 210.1% respectively are often referenced when commentators discuss its recent price moves.
• Cboe Global Markets currently has a value score of 2/6. The sections that follow will break down what different valuation methods indicate about the stock, followed by a framework that can help you think about value in a more complete way.

Cboe Global Markets scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Cboe Global Markets Excess Returns Analysis

The Excess Returns model looks at how much profit a company generates over and above the return that shareholders, in theory, require. It then adds the value of those extra profits to the underlying book value of the business.

For Cboe Global Markets, the model starts with a Book Value of US$49.10 per share and a Stable EPS of US$14.91 per share, based on weighted future Return on Equity estimates from 6 analysts. The Average Return on Equity is 22.37%, compared with a Cost of Equity of US$5.27 per share, which leaves an Excess Return of US$9.64 per share. A higher Stable Book Value of US$66.65 per share, based on estimates from 2 analysts, is also built into the calculation.

Pulling this together, the Excess Returns model estimates an intrinsic value of about US$280.58 per share, compared with the recent share price around US$297.45. That implies the stock is roughly 6.0% overvalued on this framework, so it sits close to, but slightly above, the modelled value.

Result: ABOUT RIGHT

Cboe Global Markets is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: Cboe Global Markets Price vs Earnings

P/E is a common yardstick for profitable companies because it links what you pay directly to the earnings each share generates. It helps you see how many dollars of price the market is placing on each dollar of current earnings.

What counts as a “normal” P/E often reflects what investors expect for future earnings growth and how much risk they see in the business. Higher expected growth or lower perceived risk can support a higher P/E, while lower growth or higher risk usually points to a lower P/E.

Cboe Global Markets currently trades on a P/E of 28.46x. That sits below the Capital Markets industry average P/E of 42.40x and below the peer group average of 31.05x. Simply Wall St’s Fair Ratio for Cboe Global Markets is 13.76x. This represents a proprietary estimate of what the P/E might look like given factors such as its earnings growth profile, margins, industry, market cap and specific risks.

Because the Fair Ratio builds in these company specific factors, it can be more tailored than a simple comparison to broad industry or peer averages. On this framework, the current 28.46x P/E is higher than the 13.76x Fair Ratio. This points to the shares being overvalued on this metric.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Cboe Global Markets Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so this is where Narratives come in, a simple way for you to pair a clear story about Cboe Global Markets with your own numbers for future revenue, earnings, margins and fair value, then see how that stacks up against today’s price.

A Narrative on Simply Wall St links three things in one place: the business story you believe, the financial forecast that follows from it and the fair value that those assumptions produce, all inside an easy Community page tool that millions of investors already use.

Because Narratives constantly refresh when new information such as news or earnings is added, you can quickly see whether your fair value still makes sense. This can help you decide if the gap between your Fair Value and the current share price looks like an opportunity, a warning sign or something to simply watch.

Looking at Cboe Global Markets, for example, one investor Narrative might set a Fair Value close to the higher analyst target of US$352.00, while another might anchor on the lower target of US$246.00. Those two stories would lead to very different views about whether the current price feels expensive, cheap or about right.

Do you think there's more to the story for Cboe Global Markets? Head over to our Community to see what others are saying!

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.