CBOE Holdings (NASDAQ: CBOE) and Interactive Brokers Group (NASDAQ:IBKR) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, profitability, risk, institutional ownership and analyst recommendations.

Risk & Volatility

CBOE Holdings has a beta of 0.49, suggesting that its share price is 51% less volatile than the S&P 500. Comparatively, Interactive Brokers Group has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500.

Profitability

This table compares CBOE Holdings and Interactive Brokers Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CBOE Holdings 17.81% 17.45% 9.24%
Interactive Brokers Group 4.97% 1.19% 0.13%

Valuation & Earnings

This table compares CBOE Holdings and Interactive Brokers Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CBOE Holdings $1.31 billion 9.08 $473.86 million $1.81 58.28
Interactive Brokers Group $1.36 billion 2.25 $73.61 million $1.03 41.62

CBOE Holdings has higher revenue, but lower earnings than Interactive Brokers Group. Interactive Brokers 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.

Dividends

CBOE Holdings pays an annual dividend of $1.08 per share and has a dividend yield of 1.0%. Interactive Brokers Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.9%. CBOE Holdings pays out 59.7% of its earnings in the form of a dividend. Interactive Brokers Group pays out 38.8% 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.

Institutional and Insider Ownership

82.5% of CBOE Holdings shares are owned by institutional investors. Comparatively, 15.0% of Interactive Brokers Group shares are owned by institutional investors. 1.9% of CBOE Holdings shares are owned by insiders. Comparatively, 3.4% of Interactive Brokers Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for CBOE Holdings and Interactive Brokers Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CBOE Holdings 0 6 8 0 2.57
Interactive Brokers Group 1 4 0 0 1.80

CBOE Holdings presently has a consensus target price of $79.39, indicating a potential downside of 24.74%. Interactive Brokers Group has a consensus target price of $38.60, indicating a potential downside of 9.96%. Given Interactive Brokers Group’s higher probable upside, analysts clearly believe Interactive Brokers Group is more favorable than CBOE Holdings.

Summary

CBOE Holdings beats Interactive Brokers Group on 10 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.

Interactive Brokers Group Company Profile

Interactive Brokers Group, Inc. (IBG, Inc.) is a holding company. The Company is an automated global electronic broker and market maker specializing in routing orders, and executing and processing trades in securities, futures, foreign exchange instruments, bonds and mutual funds on over 120 electronic exchanges and market centers around the world and offering custody, prime brokerage, securities and margin lending services to customers. It operates in two segments: electronic brokerage and market making. It conducts its electronic brokerage business through its Interactive Brokers (IB) subsidiaries. It conducts its market making business through its Timber Hill (TH) subsidiaries. In the United States, it conducts its business from Greenwich, Connecticut and Chicago, Illinois. Outside the United States, it conducts business in Canada, England, Switzerland, Liechtenstein, China (Hong Kong and Shanghai), India, Australia and Japan.

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