Cboe Global Markets, Inc.CBOEUSBATS

Overview Intelligence Charts News Fundamentals

DCF Valuation

DCF Valuation Summary

Strong Sell

Fair Value: $189.86 per share(market-calibrated)

-37.5%

Upside to Fair Value

Current

$303.95

Pure Model

$151.83

Fair Value

$189.86

Bull Case

$148.81

Bear Case

$149.40

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

Unreachable

Calibrated Growth

75/25 blend

Market price implies assumptions beyond model range. Fair value blends 75% model / 25% market price.

What's Driving This Ratingfor CBOE

✓

CapEx already efficient

CapEx at 0.92% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 24.94% — below the sector mature average of 32.12%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.0B (27.00% margin).

→

Moderate revenue growth

Analyst consensus projects -45.08% revenue growth, fading to 2.50% by Year 10. Revenue reaches $3.7B (vs $4.7B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $180.62/share (30.6x terminal FCF) while exit multiple gives $123.04/share (17.1x terminal FCF). The base case averages both methods.

⚠

Market price exceeds model's maximum

Even with the most optimistic terminal growth the model allows, it can't reach $303.95. The market is pricing in factors beyond the DCF framework — possibly optionality, brand premium, or expectations of margin/growth inflection not yet in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 70.14% indicates efficient cash generation. FCF reaches $789M by Year 10 (21.16% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.35

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)6.06%

Cost of Debt

Pre-tax Cost of Debt2.63%

Tax Rate29.78%

After-tax Cost of Debt1.85%

Equity Weight (E/V)94.97%

Debt Weight (D/V)5.03%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (94.97% × 6.06%) + (5.03% × 1.85%)

= 5.85%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$2.6B	$2.9B	$3.1B	$3.4B	$3.7B
EBIT	$646M	$715M	$778M	$887M	$1.0B
Tax	$192M	$213M	$232M	$264M	$300M
NOPAT	$453M	$502M	$546M	$623M	$707M
+ Depreciation	$82M	$91M	$99M	$108M	$118M
- Capex	$24M	$26M	$29M	$31M	$34M
- Δ NWC	-$41M	$3M	$3M	$3M	$2M
Free Cash Flow	$553M	$564M	$613M	$697M	$789M
Discount Factor	0.945	0.843	0.753	0.672	0.566
Present Value	$523M	$475M	$462M	$468M	$447M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$789M

Terminal Growth Rate2.50%

WACC5.85%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$24.1B

PV of Terminal Value$13.7B

Exit Multiple Method

Year 10 EBITDA$1.1B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$13.5B

PV of Terminal Value$7.6B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$4.7B

PV of Terminal Value$13.7B

Enterprise Value$18.4B

(-) Net Debt-$532M

Equity Value$18.9B

Shares Outstanding105M

Price per Share$180.62

Exit Multiple Method

PV of Projected FCFs$4.7B

PV of Terminal Value$7.6B

Enterprise Value$12.4B

(-) Net Debt-$532M

Equity Value$12.9B

Shares Outstanding105M

Price per Share$123.04

Pure Model Fair Value

$151.83

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
3.85%	$210.72	$227.95	$219.14	$210.74	$202.72
4.85%	$163.65	$176.54	$194.91	$210.74	$202.72
5.85%	$136.32	$143.07	$151.83	$163.66	$180.53
6.85%	$117.89	$121.89	$126.81	$133.01	$141.06
7.85%	$104.32	$106.88	$109.93	$113.61	$118.14

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$149.40

-50.8% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.43

Base Case

$151.83

-50.0% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.35

Bull Case

$148.81

-51.0% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.30

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-45.08%

Year 3 Revenue Growth5.52%

Year 5 Revenue Growth5.36%

Year 7 Revenue Growth4.22%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin24.94%

Terminal EBIT Margin32.12%

Tax Rate29.78%

Historical Capex / Rev0.92%

NWC / Revenue1.95%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 12x EV/EBITDA (Financial Services sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance