CBOE Holdings (NASDAQ: CBOE) and Nasdaq (NASDAQ:NDAQ) are both large-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, dividends, earnings, profitabiliy, valuation, institutional ownership and analyst recommendations.

Institutional & Insider Ownership

78.5% of CBOE Holdings shares are owned by institutional investors. Comparatively, 74.6% of Nasdaq shares are owned by institutional investors. 1.0% of CBOE Holdings shares are owned by insiders. Comparatively, 1.6% of Nasdaq shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for CBOE Holdings and Nasdaq, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CBOE Holdings 1 5 8 0 2.50
Nasdaq 0 6 3 0 2.33

CBOE Holdings currently has a consensus price target of $74.39, suggesting a potential downside of 19.12%. Nasdaq has a consensus price target of $72.78, suggesting a potential upside of 2.42%. Given Nasdaq’s higher possible upside, analysts clearly believe Nasdaq is more favorable than CBOE Holdings.

Valuation & Earnings

This table compares CBOE Holdings and Nasdaq’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 12.23 $382.46 million $1.83 50.26
Nasdaq $3.77 billion 3.11 $1.19 billion $0.83 85.62

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

Dividends

CBOE Holdings pays an annual dividend of $1.00 per share and has a dividend yield of 1.1%. Nasdaq pays an annual dividend of $1.52 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. Nasdaq pays out 183.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares CBOE Holdings and Nasdaq’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%
Nasdaq 3.87% 11.77% 4.47%

Volatility & Risk

CBOE Holdings has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500. Comparatively, Nasdaq has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500.

Summary

CBOE Holdings beats Nasdaq 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.

Nasdaq Company Profile

Nasdaq, Inc. (Nasdaq) is a holding company. The Company is a provider of trading, clearing, exchange technology, regulatory, securities listing, information and public company services. It manages, operates and provides its products and services through four segments: Market Services, Corporate Services, Information Services and Market Technology. Its global offerings include trading and clearing across various asset classes, trade management services, data products, financial indexes, capital formation solutions, corporate solutions, and market technology products and services. Its technology markets across the globe, supporting equity derivative trading, clearing and settlement, cash equity trading, fixed income trading and various other functions. Its Market Services segment include its equity derivative trading and clearing, cash equity trading, fixed income clearing corporation and trade management services businesses. Its Corporate Solutions business serves corporate clients.

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