Cboe Global Markets, Inc. CBOE
Verdict: Strong sell. Fair value $152 against a price of $252 on 6 Jan 2026, 40% below the price.
In plain words
The case for: Wide competitive moat provides durability. Market leadership enables pricing power. Industry tailwinds with growing market.
The case against: Net Income dropped from $0.53B in 2021 to $0.23B in 2022, before rebounding to $0.76B in 2023. This....
Main risks
- Sharp FCF Decline: TTM Free Cash Flow ($0.62B) has fallen dramatically from the prior two full-year periods ($1.04B in 2024, $1.03B in 2023), indicating a significant recent deterioration in cash generation.
- Poor Incremental Returns: The calculated 3-year ROIIC is a very low 4.9%, suggesting that capital invested over the last three years has generated poor returns, questioning the effectiveness of management's capital allocation.
- Inconsistent Cash Flow Data: TTM Operating Cash Flow ($0.69B) is substantially lower than the annual Free Cash Flow for 2023 and 2024. Since FCF is derived from OCF, this implies either a data reporting issue or a severe and very recent collapse in operating cash generation.
- Net Income dropped from $0.53B in 2021 to $0.23B in 2022, before rebounding to $0.76B in 2023. This...
- Valuation prices in optimistic scenario (limited margin for error)
- Net Income dropped from $0.53B in 2021 to $0.23B in 2022, before rebounding to $0.76B in 2023. This volatility is not reflected in Operating Cash Flow, which was much more stable ($0.60B -> $0.65B -> $1.08B), strongly suggesting a large, non-cash charge impacted 2022 GAAP earnings.