Intercontinental Exchange’s ICE compelling portfolio, expansive risk-management services, strategic buyouts, solid balance sheet and effective capital deployment, and favorable growth estimates make it worth retaining in one’s portfolio.
The bottom line of the operator of five cash equity exchanges and two equity options exchanges has witnessed a 16-year CAGR of 17%.
Intercontinental has a solid surprise history, beating earnings estimates in the last four reported quarters, the average being 1.98%.
Zacks Rank & Price Performance
Intercontinental currently carries a Zacks Rank #3 (Hold). Year to date, the stock has lost 21.8% compared with the industry’s decline of 29%.
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The Zacks Consensus Estimate for Intercontinental's 2022 earnings is pegged at $5.37, indicating a year-over-year improvement of 4.3% on 3.4% higher revenues of $7.4 billion. The consensus estimate for 2023 earnings is pegged at $5.69, which indicates a year-over-year improvement of 5.9% on 4.9% higher revenues of $7.8 billion.
The expected long-term earnings growth rate is pegged at 5.2%.
Intercontinental’s revenues should continue to benefit from its expansive product and service portfolio. The addition of Black Knight is estimated to complement existing revenue streams and improve the mix of high-growth recurring revenues. ICE estimates 5-6% growth in Fixed Income and Data Services recurring revenues.
Accelerated digitization has been taking place in the U.S. residential mortgage industry. ICE, with the largest mortgage network across the United States, should benefit from the structural shift. Thus, the decision to buy Black Knight will help consolidate ICE’s presence as a provider of end-to-end electronic workflow solutions for the rapidly evolving U.S. residential mortgage industry. Intercontinental projects Mortgage revenues to grow at an average annual growth rate of 8-10% over the next 10 years, while the Mortgage Technology business is expected to grow in the low to mid-teens.
Intercontinental has an impressive history of acquisitions that has not only fueled growth but also helped achieve expense synergies. The acquisition of Ellie Mae and the pending Black Knight buyout, once completed, should help ICE capitalize on the opportunities in the $14-billion addressable market.
With more than 5,000 indices representing more than $1 trillion in benchmark assets under management, ICE is the second-largest global fixed-income provider.
A healthy and minimal risk-based balance sheet is likely to continue providing stability and buoyancy over the medium to long term, while supporting strategic investments.
By virtue of a strong balance sheet with a solid cash and capital position, ICE’s dividends more than doubled in the last six years.
Stocks to Consider
Some better-ranked stocks from the finance sector are Arch Capital Group Ltd. ACGL, American Financial Group, Inc. AFG and ProAssurance Corporation PRA, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Arch Capital surpassed earnings estimates in three of the last four quarters and missed in one, the average being 33.64%. In the past year, the insurer has rallied 12.8%.
The Zacks Consensus Estimate for Arch Capital’s 2022 and 2023 earnings has moved 5.7% and 4.9% north, respectively, in the past 30 days.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 37.09%. In the past year, American Financial has lost 2.8%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 3.1% and 3.3% north, respectively, in the past 30 days.
The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average being 150.9%. In the past year, the insurer has lost 11.7%.
The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 25.9% and 13.9% north, respectively, in the past 30 days.
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Intercontinental Exchange Inc. (ICE) : Free Stock Analysis Report
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