Head-To-Head Review: Intercontinental Exchange (ICE) vs. CBOE (CBOE)

Intercontinental Exchange (NYSE: ICE) and CBOE (NASDAQ:CBOE) are both large-cap financials companies, but which is the better business? We will compare the two companies based on the strength of their profitability, risk, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Profitability

This table compares Intercontinental Exchange and CBOE’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Intercontinental Exchange 27.91% 11.01% 2.18%
CBOE 10.55% 14.70% 7.83%

Valuation & Earnings

This table compares Intercontinental Exchange and CBOE’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Intercontinental Exchange $5.96 billion 6.96 $1.42 billion $2.75 25.79
CBOE $645.11 million 22.03 $185.72 million $1.85 67.71

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

Institutional & Insider Ownership

90.8% of Intercontinental Exchange shares are owned by institutional investors. Comparatively, 84.1% of CBOE shares are owned by institutional investors. 1.5% of Intercontinental Exchange shares are owned by insiders. Comparatively, 1.9% of CBOE shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Intercontinental Exchange pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. CBOE pays an annual dividend of $1.08 per share and has a dividend yield of 0.9%. Intercontinental Exchange pays out 29.1% of its earnings in the form of a dividend. CBOE pays out 58.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Intercontinental Exchange has increased its dividend for 3 consecutive years. Intercontinental Exchange is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Intercontinental Exchange and CBOE, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Intercontinental Exchange 0 2 6 0 2.75
CBOE 0 6 4 0 2.40

Intercontinental Exchange currently has a consensus price target of $72.38, indicating a potential upside of 2.04%. CBOE has a consensus price target of $109.50, indicating a potential downside of 12.59%. Given Intercontinental Exchange’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Intercontinental Exchange is more favorable than CBOE.

Risk & Volatility

Intercontinental Exchange has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, CBOE has a beta of 0.52, suggesting that its share price is 48% less volatile than the S&P 500.

Summary

Intercontinental Exchange beats CBOE on 12 of the 17 factors compared between the two stocks.

Intercontinental Exchange Company Profile

Intercontinental Exchange Inc, formerly IntercontinentalExchange Group, Inc., is a network of regulated exchanges and clearing houses for financial and commodity markets. The Company delivers transparent and accessible data, technology and risk management services to markets around the world through its portfolio of exchanges, including the New York Stock Exchange, ICE Futures, Liffe and Euronext. In February 2014, the Company completed the acquisition of Singapore Mercantile Exchange. In July 2014, Intercontinental Exchange Inc sold its Wombat Financial Software, a unit of NYSE Technologies. Effective September 10, 2014, Intercontinental Exchange Inc acquired an undisclosed majority interest in Holland Clearing House NV.

CBOE Company Profile

Cboe Global Markets, Inc., formerly CBOE Holdings, Inc., is a holding company. The Company provides trading and investment solutions to investors around the world. It offers trading across a diverse range of products in multiple asset classes and geographies, including options, futures, United States and European equities, exchange-traded products (ETPs), global foreign exchange (FX) and multi-asset volatility products based on the Cboe Volatility Index (VIX Index). The Company’s trading venues include the options exchange in the United States and the stock exchange in Europe. Its products include VIX Index & Volatility, stock exchange options, options on single stocks and exchange traded products, Mini Options, Weeklys Options, Strategy Benchmark Indexes, Social Media Indexes, Contract Specs and Trading Hours and Trader Incentive Programs.

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