Contrasting CBOE Holdings (CBOE) and Virtu Financial (VIRT)

CBOE Holdings (NASDAQ: CBOE) and Virtu Financial (NASDAQ:VIRT) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitabiliy, risk and dividends.

Dividends

CBOE Holdings pays an annual dividend of $1.00 per share and has a dividend yield of 1.1%. Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 5.9%. CBOE Holdings pays out 54.6% of its earnings in the form of a dividend. Virtu Financial pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider and Institutional Ownership

78.6% of CBOE Holdings shares are owned by institutional investors. Comparatively, 90.6% of Virtu Financial shares are owned by institutional investors. 1.0% of CBOE Holdings shares are owned by insiders. Comparatively, 69.9% of Virtu Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

CBOE Holdings has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500. Comparatively, Virtu Financial has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500.

Profitability

This table compares CBOE Holdings and Virtu Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CBOE Holdings 18.03% 24.30% 13.19%
Virtu Financial 4.41% 20.72% 2.79%

Valuation & Earnings

This table compares CBOE Holdings and Virtu Financial’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CBOE Holdings $842.65 million 12.43 $382.46 million $1.83 51.09
Virtu Financial $567.89 million 1.16 $29.28 million $0.72 22.50

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

Analyst Recommendations

This is a breakdown of recent recommendations for CBOE Holdings and Virtu Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CBOE Holdings 1 5 8 0 2.50
Virtu Financial 2 0 0 0 1.00

CBOE Holdings currently has a consensus target price of $74.89, suggesting a potential downside of 19.89%. Virtu Financial has a consensus target price of $14.50, suggesting a potential downside of 10.49%. Given Virtu Financial’s higher possible upside, analysts clearly believe Virtu Financial is more favorable than CBOE Holdings.

Summary

CBOE Holdings beats Virtu Financial on 12 of the 16 factors compared between the two stocks.

CBOE Holdings Company Profile

CBOE Holdings, Inc. is a holding company. The Company’s principal business is operating markets that offer for trading options on various market indexes (index options), on an exclusive basis, and futures contracts, as well as on non-exclusive multiply listed options, such as options on the stocks of individual corporations (equity options), and options on other exchange-traded products (ETP options), such as exchange-traded funds (ETF options) and exchange-traded notes (ETN options). The Company’s subsidiaries include Chicago Board Options Exchange, Incorporated (CBOE), CBOE Futures Exchange, LLC (CFE), C2 Options Exchange, Incorporated (C2), Market Data Express, LLC and Chicago Options Exchange Building Corporation. The Company operates CBOE, CFE and C2 as stand-alone exchanges. The options contracts listed for trading include options on indexes, equities and ETPs. In addition, the Company provides a marketplace for trading futures contracts through CFE.

Virtu Financial Company Profile

Virtu Financial, Inc. is a holding company. The Company is a technology-enabled market maker and liquidity provider to the financial markets across the world. It is engaged in buying or selling a range of securities and other financial instruments and earning small bid/ask spreads across various transactions. It has a single, multi-asset, multi-currency technology platform, through which it provides quotations to buyers and sellers in equities, commodities, currencies, options, fixed income and other securities on exchanges, markets and liquidity pools in various countries around the world. It makes markets in a range of different assets classes, such as Americas Equities; Europe, the Middle East and Africa (EMEA) Equities; Asia Pacific (APAC) Equities; Global Commodities; Global Currencies, and Options, Fixed Income and Other Securities. It makes markets for global banks, brokers and other intermediaries, and indirectly provides services to retail and institutional investors.

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