CBOE Holdings Q2 Earnings Beat as Topline Rises; Ups Dividend - Analyst Blog

CBOE Holdings Inc. CBOE reported second-quarter 2015 operating earnings of 54 cents per share, which comfortably surpassed the Zacks Consensus Estimate as well as the year-ago quarter result by 8%.

With this, the company’s average four-quarter beat stands at 0.7%. The bottom-line growth during the second quarter is attributable to strategic initiatives taken by the company as well as efficient cost management. CBOE Holdings also benefited from its proprietary products.
 

Cboe Holdings Inc. - Earnings Surprise | FindTheBest

 

Total operating revenue increased 3.3% year over year to $148.7 million. Revenues grew primarily due to a 3.8% rise in transaction fees, nearly 1% higher exchange services and other fees and a 97.4% surge in other revenues. However, the top-line growth was limited by lower access fees, market data fees and regulatory fees.

Total trading volumes of CBOE Holdings decreased 9.4% year over year to 275.9 contracts due to a low trading volume environment. However, revenue per contract (RPC) climbed 14.3% year over year to 36.8 cents driven by the shift in the product mix traded.

Total operating expenses increased 1.5% year over year to $75.3 million.

Operating margin during the reported quarter improved 90 basis points to 49.3% due to a higher revenue base.

Financial Update

As of Jun 30, 2015, CBOE Holdings had cash and cash equivalents of $89.6 million, down from $147.9 million at the end of 2014. Total assets came in at $362.1 million at the end of Jun 2015, down from $383.9 million at year-end 2014.

Long-term liabilities were $62.6 million, up from $60.2 million at year-end 2014, while total shareholder equity fell to $227 million from $250.1 million at the end of 2014.

 Net operating cash flow decreased 12.7% year over year to $105.8 million during the first half of 2015.

Share Repurchase Update

CBOE Holdings repurchased about 0.82 million shares for $47.2 million during the reported quarter. Notably, 9.2 million shares worth $389 million have been repurchased since the inception of the share buyback program in 2011. The company had about $111 million worth of shares available for buybacks at the end of Jun 2015.

Dividend Update

On Jul 29, 2015, the board of directors at CBOE Holdings announced 10% increase in its quarterly dividend to 23 cents per share compared with 21 cents paid previously. The company regularly shares its profits with shareholders and with the latest hike the company’s quarterly dividend has more than doubled since 2010.

2015 Outlook

CBOE Holdings reiterated its outlook for 2015. Core operating expenses are now estimated in the range of $190–194 million in 2015, up about 1–3% from $188.9 million in 2014.

Meanwhile, depreciation and amortization expenses continue to be in the $46–48 million band. Continuing stock-based compensation expenses, included in core expenses, are expected to be about $12 million in 2015. The effective tax rate will likely be within 38.5–39.5%. Capital expenditure is projected in the range of $37–40 million.

Zacks Rank

CBOE Holdings presently carries a Zacks Rank #3 (Hold). Other stocks in the financial sector like Fiserv, Inc. FISV, CME Group Inc. CME and The Nasdaq OMX Group, Inc. NDAQ all reported their second quarter 2015 financial results and surpassed the Zacks Consensus Estimate.

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