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Is it the Right Time to Hold Intercontinental Exchange (ICE)?
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Shares of Intercontinental Exchange, Inc. (ICE - Free Report) have gained 15.9% year to date underperforming the 25.6% growth for the Zacks categorized Securities Exchanges industry. However, we see potential upside for the stock, given the company’s strength in its energy franchise, increasing recurring market data revenues and expense management.
Intercontinental Exchange’s third-quarter 2016 operating earnings per share (EPS) of $3.21 missed the Zacks Consensus Estimate by a penny. However, earnings improved about 10.3% year over year. This marked the eight straight quarter of double-digit earnings growth for the company. The bottom-line improvement was backed by growth across the company’s data and listings business segments.
Notably, effective Nov 4, 2016, the company went for a five-for-one stock split of common stock. Adjusting for the stock split, EPS stands at 64 cents for the third-quarter 2016.
What Should Favor the Stock Ahead?
The company started fourth-quarter 2016 on a positive note as well. Its average daily volume (ADV) for October increased 17% year over year to 5.5 million contracts (comprising options and futures). Also, ADV for November climbed 12% year over year to 5.7 million contracts. Volume growth should boost the top line.
In addition, the guidance for data revenue looks impressive. The company expects data services revenue for 2016 to increase in the range of 6–7% on a year-over-year basis.
Further, Intercontinental Exchange continues to benefit from its strategic acquisitions. It estimates $115 million in synergies in 2016. The company also projects adjusted operating expenses in the range of $1.94–$1.97 billion for this year – reflecting a 3% decline from the 2015 level and a $75-million improvement from the initial guidance.
The company continues to drive organic growth with 11 exchanges and seven clearing houses, covering nine asset classes. Its intermittent restructuring programs through acquisitions and spin-offs have also driven robust inorganic growth, as reflected in increased assets and global expansion. Given its progress on the fundamentals, the stock should keep performing well in the quarters ahead.
However, we remain apprehensive due to several headwinds, including stiff competition and stricter regulations in the industry.
Intercontinental Exchange currently carries Zacks Rank #3 (Hold).
Stocks to Consider
Regional Management Corp. (RM - Free Report) : The Zacks Consensus Estimate for 2016 inched up 1% for both 2016 and 2017, to $2.03 per share and $2.68, respectively, over the last 60 days. The company carries a Zacks Rank #2 (Buy).
LegacyTexas Financial Group Inc. : Over the last 60 days, the Zacks Consensus Estimate for the current year increased 7.7% to $2.09 and advanced 6.5% to $2.31 for 2017. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vantiv, Inc. : Over the last 60 days, the Zacks Consensus Estimate for the current year moved up 1.2% to $2.57 and climbed 1% to $2.93 for 2017. The company carries a Zacks Rank #2.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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Is it the Right Time to Hold Intercontinental Exchange (ICE)?
Shares of Intercontinental Exchange, Inc. (ICE - Free Report) have gained 15.9% year to date underperforming the 25.6% growth for the Zacks categorized Securities Exchanges industry. However, we see potential upside for the stock, given the company’s strength in its energy franchise, increasing recurring market data revenues and expense management.
Intercontinental Exchange’s third-quarter 2016 operating earnings per share (EPS) of $3.21 missed the Zacks Consensus Estimate by a penny. However, earnings improved about 10.3% year over year. This marked the eight straight quarter of double-digit earnings growth for the company. The bottom-line improvement was backed by growth across the company’s data and listings business segments.
Notably, effective Nov 4, 2016, the company went for a five-for-one stock split of common stock. Adjusting for the stock split, EPS stands at 64 cents for the third-quarter 2016.
What Should Favor the Stock Ahead?
The company started fourth-quarter 2016 on a positive note as well. Its average daily volume (ADV) for October increased 17% year over year to 5.5 million contracts (comprising options and futures). Also, ADV for November climbed 12% year over year to 5.7 million contracts. Volume growth should boost the top line.
In addition, the guidance for data revenue looks impressive. The company expects data services revenue for 2016 to increase in the range of 6–7% on a year-over-year basis.
Further, Intercontinental Exchange continues to benefit from its strategic acquisitions. It estimates $115 million in synergies in 2016. The company also projects adjusted operating expenses in the range of $1.94–$1.97 billion for this year – reflecting a 3% decline from the 2015 level and a $75-million improvement from the initial guidance.
The company continues to drive organic growth with 11 exchanges and seven clearing houses, covering nine asset classes. Its intermittent restructuring programs through acquisitions and spin-offs have also driven robust inorganic growth, as reflected in increased assets and global expansion. Given its progress on the fundamentals, the stock should keep performing well in the quarters ahead.
However, we remain apprehensive due to several headwinds, including stiff competition and stricter regulations in the industry.
Intercontinental Exchange currently carries Zacks Rank #3 (Hold).
Stocks to Consider
Regional Management Corp. (RM - Free Report) : The Zacks Consensus Estimate for 2016 inched up 1% for both 2016 and 2017, to $2.03 per share and $2.68, respectively, over the last 60 days. The company carries a Zacks Rank #2 (Buy).
LegacyTexas Financial Group Inc. : Over the last 60 days, the Zacks Consensus Estimate for the current year increased 7.7% to $2.09 and advanced 6.5% to $2.31 for 2017. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vantiv, Inc. : Over the last 60 days, the Zacks Consensus Estimate for the current year moved up 1.2% to $2.57 and climbed 1% to $2.93 for 2017. The company carries a Zacks Rank #2.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>