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Intercontinental Exchange (ICE) Up 23% YTD: Here's Why

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Intercontinental Exchange (ICE - Free Report) shares have gained 22.8% year to date compared with the industry's increase of 9.1%, In contrast, the Finance sector has declined 4.2%. The Zacks S&P 500 composite has risen 16.9% in the said time frame. With market capitalization of $63.8 billion, average volume of shares traded in the last three months was 2.6 million.

A compelling portfolio, broad range of risk management services, timely achievement of cost synergies and solid capital position continue to drive Intercontinental Exchange. The company has delivered earnings beat in the last three reported quarters.

The company has been continually improving its return on equity (ROE) since 2017. Its ROE of 13.6% in the trailing twelve months was better than the industry average of 11.7%, reflecting the company’s efficiency in utilizing shareholders’ fund.  

Will the Bull Run Continue?

The Zacks Consensus Estimate for 2021 earnings has moved up 0.6% in the past seven days, reflecting analysts’ optimism. The consensus estimate indicates year-over-year increase of 6.9%.

The expected long-term earnings growth rate is pegged at 11.1%, better than the industry average of 7.7%.

Intercontinental Exchange remains well-poised for growth on the back of accelerated digitization taking place in the U.S. residential mortgage industry. This Zacks Rank #3 (Hold) company boasts the largest mortgage network across the United States. The integration of Ellie Mae into ICE Mortgage Technology is likely to help the company in boosting its mortgage business.

A strong product and service suite along with strategic acquisitions should continue to help Intercontinental Exchange boost its revenue stream.

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 boost its data revenues. Volume growth should continue to drive Trading and Clearing segment revenues.

With over 5,000 indices representing more than $1 trillion in benchmark assets under management, the company boasts being the second-largest fixed income provider globally.

Intercontinental Exchange possesses a strong balance sheet with a solid cash and capital position. A healthy and minimal risk-based balance sheet is likely to continue providing stability and buoyancy to the company over the medium to long term.

Stocks to Consider

Some better-ranked companies from the finance sector are MarketAxess Holdings Inc. (MKTX - Free Report) , OTC Markets Group (OTCM - Free Report) and Nasdaq (NDAQ - Free Report) , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) here.

MarketAxess delivered an earnings surprise of 2.30% in the last reported quarter.
OTC Markets Group delivered an earnings surprise of 12.12% in the last reported quarter.

Nasdaq delivered an earnings surprise of 5.52% in the last reported quarter.

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