CBOE Holdings (NASDAQ: CBOE) and CME Group (NASDAQ:CME) are both large-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, earnings, profitabiliy, risk and valuation.
Dividends
CBOE Holdings pays an annual dividend of $1.00 per share and has a dividend yield of 1.1%. CME Group pays an annual dividend of $2.64 per share and has a dividend yield of 2.1%. CBOE Holdings pays out 54.6% of its earnings in the form of a dividend. CME Group pays out 57.1% 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.
Profitability
This table compares CBOE Holdings and CME Group’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% |
| CME Group | 43.62% | 7.43% | 2.24% |
Insider & Institutional Ownership
78.6% of CBOE Holdings shares are owned by institutional investors. Comparatively, 83.2% of CME Group shares are owned by institutional investors. 1.0% of CBOE Holdings shares are owned by insiders. Comparatively, 0.6% of CME Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Risk & Volatility
CBOE Holdings has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500. Comparatively, CME Group has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500.
Valuation & Earnings
This table compares CBOE Holdings and CME Group’s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| CBOE Holdings | $842.65 million | 12.66 | $382.46 million | $1.83 | 52.03 |
| CME Group | $3.59 billion | 11.72 | $2.45 billion | $4.62 | 26.79 |
CME Group has higher revenue and earnings than CBOE Holdings. CME Group 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 summary of recent ratings for CBOE Holdings and CME Group, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| CBOE Holdings | 1 | 5 | 8 | 0 | 2.50 |
| CME Group | 0 | 2 | 4 | 0 | 2.67 |
CBOE Holdings currently has a consensus price target of $74.89, indicating a potential downside of 21.34%. CME Group has a consensus price target of $131.33, indicating a potential upside of 6.09%. Given CME Group’s stronger consensus rating and higher probable upside, analysts plainly believe CME Group is more favorable than CBOE Holdings.
Summary
CME Group beats CBOE Holdings on 9 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.
CME Group Company Profile
CME Group Inc., through its exchanges, provides products across all asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The Company’s segment primarily consists of the Chicago Mercantile Exchange Inc. (CME), Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. (NYMEX) and Commodity Exchange, Inc. (COMEX) exchanges. The Company provides electronic trading around the globe on its CME Globex platform. The Company also offers clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives through its clearinghouses CME Clearing and CME Clearing Europe. It also provides hosting, connectivity and customer support for electronic trading through its co-location services. The Company’s CME Direct platform offers side-by-side trading of exchange-listed and privately negotiated markets.
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