Yahoo Finance Intercontinental Up on Initiatives & Solid Capital Position
Intercontinental Exchange, Inc. ICE is currently riding on actions intended to upgrade the product portfolio and a solid capital position.
The company has a decent surprise history. It surpassed estimates in three of the trailing four quarters, the average positive surprise being 4.3%. The Zacks Consensus Estimate for current-quarter earnings has been revised 1.9% upward over the past 30 days.
Factors Driving Intercontinental Exchange
The company continues to benefit from a solid product portfolio equipped with a wide variety of risk management services. As a result, revenues have witnessed a CAGR of 9.3% in the last five years (2014-2019). Revenues are also likely to benefit from existing strength in global data services.
Intercontinental Exchange reported strong volume growth for February. Average daily volumes (ADV) in the month increased 39% to 7.6 million, largely backed by improved Financial ADV, Commodities ADV and Energy ADV.
Furthermore, Intercontinental Exchange is on track to enhance its product portfolio on a continual basis. Last month, the company revealed plans to extend ties with S&P Global Platts for introducing a version of its market data platform. The platform — ICE Connect — is aimed at improving the risk management capabilities of customers. Also, it announced plans in January to launch a data service in the second half of 2020, intended to assist investors in assessing environmental, social and governance (ESG) risks.
Intercontinental Exchange also enjoys a robust capital position. Evidently, the company’s operating cash flow witnessed a CAGR of 12.9% in the last two years (2017-2019). The metric also improved 5% year over year in 2019 on the back of operational excellence. Notably, it generated free cash flow of $2.3 billion in 2019 and returned more than 90% of that cash to shareholders via dividends and share repurchases.
However, elevated operating expenses due to several initiatives are significantly concerning.
Shares of this Zacks Rank #3 (Hold) company have gained 22.2% in the past year, underperforming the industry’s rise of 24.3%. Nonetheless, we believe that the company’s strong fundamentals will drive its shares, going forward.
Stocks to Consider
Some better-ranked stocks from the same space are Cboe Global Markets, Inc. CBOE, MarketAxess Holdings Inc. MKTX and Nasdaq, Inc. NDAQ. All three stocks beat the Zacks Consensus Estimate in the last reported quarter by 9.01%, 1.54% and 1.57%, respectively.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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