Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Intercontinental Exchange, Inc.'s (NYSE:ICE) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Was ICE's recent earnings decline indicative of a tough track record?
ICE's trailing twelve-month earnings (from 30 September 2019) of US$2.1b has declined by -20% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 20%, indicating the rate at which ICE is growing has slowed down. What could be happening here? Well, let's look at what's occurring with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, Intercontinental Exchange has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 2.5% exceeds the US Capital Markets industry of 1.5%, indicating Intercontinental Exchange has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Intercontinental Exchange’s debt level, has increased over the past 3 years from 9.1% to 10%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I recommend you continue to research Intercontinental Exchange to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ICE’s future growth? Take a look at our free research report of analyst consensus for ICE’s outlook.
- Financial Health: Are ICE’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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