Intercontinental Exchange, Inc. (NYSE:ICE): Will The Growth Last?
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Intercontinental Exchange, Inc.'s (NYSE:ICE) latest earnings update in December 2018 confirmed that the business faced a major headwind with earnings declining by -21%. Below, I've presented key growth figures on how market analysts view Intercontinental Exchange's earnings growth trajectory over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Check out our latest analysis for Intercontinental Exchange
Analysts' outlook for the coming year seems pessimistic, with earnings decreasing by -2.2%. But in the following year, there is a complete contrast in performance, with reaching double digit 4.5% compared to today’s level and continues to increase to US$2.2b in 2022.
Even though it’s useful to be aware of the growth rate each year relative to today’s figure, it may be more beneficial to gauge the rate at which the earnings are moving on average every year. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Intercontinental Exchange's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 3.2%. This means, we can assume Intercontinental Exchange will grow its earnings by 3.2% every year for the next few years.
Next Steps:
For Intercontinental Exchange, there are three essential factors you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is ICE worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ICE is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ICE? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
