Here's Why Hold Strategy is Apt for Intercontinental (ICE)
Intercontinental Exchange Inc. ICE remains well-poised for growth on the back of a compelling portfolio, expansive risk-management services, strategic buyouts, solid balance sheet, effective capital deployment and favorable growth estimates.
Zacks Rank & Price Performance
Intercontinental currently carries a Zacks Rank #3 (Hold). In a year, the stock has gained 9.2% compared with the industry’s growth of 19.5%.
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Growth Projections
The Zacks Consensus Estimate for 2023 earnings is pegged at $5.58 per share, indicating an increase of 5.3% year over year on 10.3% higher revenues of $8.05 billion. The consensus estimate for 2024 earnings is pegged at $5.83 per share, indicating an increase of 4.4% year over year on 13.9% higher revenues of $9.17 billion.
Earnings Surprise History
Intercontinental has a solid surprise history, beating earnings estimates in three of the last four reported quarters while missing in one, the average being 2.15%.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 13%, comparing favorably with the industry’s 12.3% and reflecting the company’s efficiency in utilizing shareholders’ fund.
Growth Drivers
With more than 5,000 indices representing over $1 trillion in benchmark assets under management, ICE is the second-largest global fixed-income provider.
An expansive and compelling product and service portfolio should continue to fuel top-line improvement. Black Knight acquisition further complements existing revenue streams and improves the mix of high-growth recurring revenues. ICE estimates mid-single digit growth in Fixed Income and Data Services recurring revenues.
ICE, with the largest mortgage network across the United States, should benefit from accelerated digitization in the U.S. residential mortgage industry. Intercontinental projects Mortgage revenues to grow at an average annual rate of 8-10% over the next 10 years, while the Mortgage Technology business is expected to grow in the low to mid-teens. ICE estimates mid to high-single-digit growth in recurring revenues in the mortgage technology segment in 2023.
Intercontinental has an impressive history of acquisitions, which have not only fueled growth but also helped achieve expense synergies.
Its 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.
A solid capital position helps ICE boost shareholders' value by buying back shares and hiking dividends. While ICE has more than doubled its dividends in the last six years, it has $2.5 billion remaining under its authorization kitty.
Stocks to Consider
Some better-ranked stocks from the securities and exchanges sector are Cboe Global Markets, Inc. CBOE, Coinbase Global, Inc. COIN and Deutsche Boerse AG DBOEY. While Cboe Global sports a Zacks Rank #1 (Strong Buy), Coinbase Global and Deutsche Boerse carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cboe Global has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 4.07%. In the past year, CBOE has gained 44.8%.
The Zacks Consensus Estimate for CBOE’s 2023 and 2024 earnings per share is pegged at $7.58 and $7.99, indicating a year-over-year increase of 9.3% and 5.4%, respectively.
Coinbase Global has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 62.95%. In the past year, COIN has rallied 256.8%.
The Zacks Consensus Estimate for COIN’s 2023 and 2024 earnings per share indicates a year-over-year increase of 91.7% and 29.3%, respectively.
Deutsche Boerse has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 3.85%. In the past year, DBOEY has gained 9.3%.
The Zacks Consensus Estimate for DBOEY’s 2023 and 2024 earnings per share is pegged at $1 and $1.04, indicating a year-over-year increase of 9.8% and 4%, respectively.
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Intercontinental Exchange Inc. (ICE) : Free Stock Analysis Report
Cboe Global Markets, Inc. (CBOE) : Free Stock Analysis Report
Deutsche Boerse AG (DBOEY) : Free Stock Analysis Report
Coinbase Global, Inc. (COIN) : Free Stock Analysis Report
