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Intercontinental (ICE) to Report Q2 Earnings: What's in Store?

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Intercontinental Exchange Group ICE is slated to report second-quarter 2021 results on Jul 29, before market open. The company delivered an earnings surprise in each of the last four quarters, the average being 3.42%.

Let’s see how things have shaped up for this announcement.

Favorable financing conditions, consolidated feeds, transaction-based revenues, growth across its business lines and strong retention rate are expected to have benefited second-quarter performance of Intercontinental Exchange.

Revenues are likely to have benefited from better performance at Exchanges, Fixed Income and Data Services, and Mortgage Technology segments. The company estimates consolidated revenues for second-quarter 2021 in the range of $844-$859 million. The Zacks Consensus Estimate for revenues is pegged at $1.7 billion, indicating 22.9% increase from the year-ago reported figure.

Transaction revenues are expected to have benefited from growth in energy, interest rate and cash equities businesses.

For second-quarter 2021, recurring revenues in the Exchange segment are expected to be $315 -$320 million. The Zacks Consensus Estimate for revenues is pegged at $906 million.

Mortgage Technology segment revenues are likely to have benefited from favorable financing conditions, accelerating millennial homeownership trends and demand for digital workflow tools. For second-quarter 2021, the company guided recurring revenues in the Mortgage Technology segment between $128 million and $133 million, indicating around 30% growth year over year on a pro-forma basis.

Continued strength in the pricing and analytics business driven by strong customer demand for the company’s pricing and reference data products, and connectivity offerings are likely to have boosted its data revenues in the to-be-reported quarter.

Other data and network services is expected to have benefited from continued growth in customer demand for both ICE Global Network and consolidated feeds.

Fixed income data and analytics revenues are likely to have benefited from strength in index business, and continued growth in pricing and reference data business, fueled by strong retention rate of existing customers, addition of new customers, increased purchases by existing customers and increases in pricing of products. For second-quarter 2021, recurring revenues in fixed income and data services segment are expected to be $401-$406 million.

Expenses are likely to have increased given increase in compensation and benefits, professional services, acquisition-related transaction and integration as well as technology and communication costs, rent and occupancy, and selling, general and administrative expenses. This, in turn, might have restricted margin expansion and hurt the company’s overall performance. The company expects second-quarter GAAP non-operating expenses to be in the range of $97 million to $102 million. Adjusted non-operating expenses are expected to be in the range of $105 million to $110 million.

The company reported soft average daily volume (ADV) for the second quarter but improved ADV for June 2021. ADV of 5.5 million contracts per day was down 0.3% year over year in the second quarter due to lower volumes in Commodities partly offset by higher Financials. Commodities ADV declined 8.4% to 3.2 million owing to 9.6% lower Energy ADV, partly offset by 0.5% higher Agriculture and Metals ADV. Financials ADV increased 13.2% attributable to higher interest rate volume and foreign exchange volume.

The Zacks Consensus Estimate for earnings is pegged at $1.16, indicating an increase of 8.4% from the prior-year quarter reported figure.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Intercontinental Exchange this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case as you can see below.

Earnings ESP: Intercontinental Exchange has an Earnings ESP of 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate Estimate is pegged at $1.16. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Intercontinental Exchange Inc. Price and EPS Surprise

Intercontinental Exchange Inc. Price and EPS Surprise
Intercontinental Exchange Inc. Price and EPS Surprise

Intercontinental Exchange Inc. price-eps-surprise | Intercontinental Exchange Inc. Quote

Zacks Rank: Intercontinental Exchange currently carries a Zacks Rank of 4 (Sell).

Stocks to Consider

Some stocks worth considering from the finance sector with a perfect mix of elements to surpass estimates in their upcoming quarterly releases are as follows:

Coinbase Global COIN has an Earnings ESP of +6.64% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aflac Incorporated AFL has an Earnings ESP of +2.20% and a Zacks Rank of 3, at present.

American Tower Corporation AMT has an Earnings ESP of +1.67% and a Zacks Rank #3.


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