Is Intercontinental Exchange's (NYSE:ICE) 142% Share Price Increase Well Justified?
The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. For instance, the price of Intercontinental Exchange, Inc. (NYSE:ICE) stock is up an impressive 142% over the last five years.
View our latest analysis for Intercontinental Exchange
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Over half a decade, Intercontinental Exchange managed to grow its earnings per share at 11% a year. This EPS growth is slower than the share price growth of 19% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. And that's hardly shocking given the track record of growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into Intercontinental Exchange's key metrics by checking this interactive graph of Intercontinental Exchange's earnings, revenue and cash flow.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Intercontinental Exchange the TSR over the last 5 years was 157%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Intercontinental Exchange shareholders gained a total return of 28% during the year. But that return falls short of the market. On the bright side, that's still a gain, and it's actually better than the average return of 21% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. It's always interesting to track share price performance over the longer term. But to understand Intercontinental Exchange better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Intercontinental Exchange .
But note: Intercontinental Exchange may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
