Cboe Global Markets, Inc. (CBOE): what the price requires

At today's price, Cboe Global Markets, Inc. (CBOE) is priced for -0.8% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/CBOE

Headline

FieldValue
TickerCBOE
CompanyCboe Global Markets, Inc.
Current price$276.18/sh
CompositionTransaction and clearing fees 76% / Access and capacity fees 9% / Market data fees 7% / Regulatory fees 6% / Other revenue 2%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed5.0%
Operating margin today32.8%
Margin compression implied-27.8pp
Implied growth-0.8%
Multiple paid18x operating income

The operating-margin requirement is derived from the framework's value band at year 11, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 7.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.5pp.

Reconcile: at the x-ray's 9.3% required return this reads ~12.9%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.82σ
cohort percentile (of 16 peers)38
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.17x5expensive
Earnings1.58x4expensive
Relative1.02x4expensive
Growth0.71x3justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.6%); the inversion above states its own rate.

Per-Model Detail (n=16)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$688.480.40xyesFCF base $2.9B, growth 11% (input: historical growth), terminal g 4.0%, WACC 8.6%, 6yr projection
DCF Exit MultipleGrowth$388.170.71xyesExit EV/EBITDA: 14.7x / 16.7x / 18.7x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$201.491.37xyesP/E 15.44x (blended: static sector reference 12x + trailing (TTM) 23x), scenarios: 12.8x / 15.4x / 18.0x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$127.172.17xyesBV/sh $51.18, ROE (TTM) 23.0%, ke 9.3%
Two-Stage Excess ReturnAsset$199.961.38xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$230.361.20xyesRev $4.8B, growth 11% (input: historical growth; tapered), Terminal P/S: 5.0x / 6.1x / 7.1x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$409.850.67xyesEPS $11.71, growth 35% (input: historical EPS growth), PEG=0.67 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$87.693.15xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.16B × (1−25%) / WACC 8.6% → EPV (no growth)
Residual IncomeAsset$184.831.49xyesBV $51.18 + 5yr PV of (ROE (TTM) 23.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$116.122.38xyes√(22.5 × EPS $11.71 × BVPS $51.18) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings$279.530.99xyesFCF $2724.2M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$377.840.73xyesEPS $11.71 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$41.036.73xyesBV $51.18 × (ROIC 6.9% / WACC 8.6%)
P/Sales SectorRelative$136.912.02xyesRevenue $4.79B × sector P/S 3.0x
PEG Fair ValueRelative$439.130.63xyesEPS $11.71 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$126.592.18xyesEPS $11.71 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net cash$726.9m
Net debt / NOPAT (after-tax)-0.62x (net cash)
Net debt / operating income (pre-tax)-0.46x (net cash)
Interest coverage30.0x
Share count CAGR (buyback)-0.4%
Burning cashno

Bullet Takeaways

Bull Case

The obvious bear worry about Cboe is that its revenue rides on volatility, a thing nobody controls, so a calm market should starve it. Look at the data and the worry is real but incomplete. Yes, the first quarter's record came as the VIX hit multi-year highs on trade tensions and geopolitical conflict, lifting net revenue 29% to $728.9 million. But the reason Cboe captures that demand at all is structural: it owns the products investors reach for when they want to hedge. The 10-K is explicit that its exclusive license to the S&P 500 index and its proprietary rights to the VIX methodology are central, and that a competitor without them cannot simply replicate SPX and VIX options. That exclusivity is the toll booth on the single busiest hedging road in finance.

The business is also less volume-dependent than the volatility frame suggests, because a growing share of revenue recurs regardless of how much trading happens. The filing describes rising "access and capacity fees and proprietary market data fees," driven by demand for ports and data feeds across its options and equities segments. Those are subscription-like revenues that an exchange collects whether the tape is busy or quiet, and they smooth the cyclicality of transaction fees. A franchise that gets paid for access and data on top of trading is more durable than one that only clips a fee per contract.

The economics are exceptional and the capital model is clean. Cboe runs an operating margin north of 33% and earns a return on equity around 23% on a balance sheet that carries net cash, with interest covered roughly 30 times over. An exchange is an asset-light business: once the matching engine and the index franchise exist, incremental volume drops almost entirely to profit. Management is leaning into that, raising full-year organic revenue growth guidance to low-double-digit-to-mid-teens while cutting expense guidance and reshaping the workforce toward higher-return businesses. The price, notably, is not demanding: it embeds essentially flat operating profit, so the bull case does not even require the volatility windfall to repeat, only for the franchise to hold.

Bear Case

The fragile assumption baked into Cboe's price is that its proprietary product moat stays proprietary. The entire premium-margin engine rests on a handful of exclusive franchises, and the company says so plainly: the loss of its exclusive license to the S&P 500 index "for any reason could have a material adverse effect on our business and profitability," and the same applies if it cannot retain "exclusive proprietary rights in the VIX Index methodology and related products." Licenses come up for renewal, methodologies can be challenged, and a regulator or an index provider that changed terms would strike at the most profitable part of the business. This is a narrow base of dependency for a company valued as a durable compounder.

The substitution threat is the slower-moving version of the same risk. The 10-K acknowledges that competitors offer "multi-listed options products, such as SPY options, which offer some of the features of our proprietary products, such as SPX options," and that Cboe has at times resorted to "inverted pricing specials or non-transaction fee trading" to defend share. SPY-based products are not identical to SPX, but they are close enough that a meaningful slice of hedging demand can migrate to cheaper venues, and every fee-schedule war chips at the pricing power that makes the margins what they are. An exchange that has to discount to hold volume is showing where its moat thins.

The cyclicality is the assumption most likely to disappoint near term. The first quarter was a record precisely because volatility spiked, and volatility mean-reverts. When the VIX recedes, the transaction and clearing fees that drove the 33% jump in options revenue recede with it, and the year-over-year comparisons that look spectacular today become difficult. The price embeds roughly flat operating profit, which is a modest bar, but the realignment that cuts 20% of the workforce is also a tell: management is taking out cost ahead of a normalization it can see coming. A business this geared to an uncontrollable input will have quarters where the input goes the wrong way, and the current results are set against an unusually favorable backdrop.

Valuation

The bet in Cboe's price is unusually undemanding for a company with these economics. At today's level the market pays about 16 times company-wide operating income, which inverts to a requirement that operating profit grow roughly flat, even slightly negative, over the next several years. Cboe runs a 33.8% operating margin today, so the price is not asking the franchise to expand; it is asking it not to shrink. For a business with exclusive index products and a net-cash balance sheet, that is a low bar, and it reflects the market discounting the volatility-driven cyclicality rather than the durability of the franchise.

The methods split along a clear line. The asset-value lenses read the stock as expensive, which is the expected result for an asset-light exchange: book value is small relative to the earnings power, so any method anchored to the balance sheet understates a business whose value is the franchise, not the assets. The relative-multiple and growth-and-cash-flow methods, which price the earnings rather than the assets, support or exceed the current price. That pattern is the correct read for a high-return, capital-light operator: the price is justified by what the franchise earns, not by what it owns, and the asset-based skepticism is a feature of the accounting, not a warning about the business.

Solvency is a non-issue and a quiet strength. Cboe holds net cash of roughly $727 million against modest gross debt, with operating income covering interest about 30 times over, so there is no leverage risk to amplify a soft volatility year. Share count has been essentially flat, so the capital return runs through dividends rather than aggressive buybacks. The cohort comparison places Cboe in the lower half of the exchange-and-financial-infrastructure peer multiple range, which is the value angle: a franchise earning exchange-grade margins, priced for flat growth, sitting below peers on the multiple. The closing question for the buyer is whether the volatility cycle is friend or foe, because the same product moat that makes the margins durable also ties the revenue to a market input that does not stay elevated forever.

Catalysts

The first quarter was a volatility-fueled record. Net revenue rose 29% year over year to $728.9 million, driven by record options net revenue of $467.6 million, up 33%, as total options average daily volume increased 10% and the VIX climbed to multi-year highs on trade tensions and the Iran-Israel conflict. Higher volatility is a direct revenue tailwind for Cboe because uncertainty drives institutional and retail demand for the index options it uniquely offers, and the quarter's results came in well ahead of expectations.

Management used the strength to reset the cost base and the outlook. It raised full-year organic revenue growth guidance to low-double-digit-to-mid-teens from mid-single-digit, cut operating expense guidance, and announced a strategic realignment expected to reduce the workforce by about 20% while redirecting capital toward higher-return businesses. The forward watch items are the durability of options volume as volatility normalizes, the execution of the realignment and whether the cost savings stick, and any developments around the exclusive index licenses that underpin the franchise. The first decides the top line, the second decides the margin, and the third decides the moat.

Peer Cohorts (Per Segment, With Filing Citations)

Options (reported)

North American Equities (reported)

Europe and Asia Pacific (reported)

Futures (reported)

Global FX (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 earnings release

View the full interactive CBOE report on boothcheck