Intercontinental Exchange’s ( ICE Quick Quote ICE - Free Report) compelling portfolio, expansive risk management services, strategic buyouts, solid balance sheet and effective capital deployment along with favorable growth estimates make it worth retaining in one’s portfolio. The bottom line of this operator of five cash equity exchanges and two equity options exchanges has witnessed a 16-year CAGR of 17%. Zacks Rank & Price Performance
Intercontinental currently carries a Zacks Rank #3 (Hold). Year to date, the stock has lost 24.8% compared with the
industry’s decrease of 32.1%. Image Source: Zacks Investment Research Earnings Surprise History
Intercontinental Exchange has a solid surprise history, beating earnings estimates in the last four reported quarters, with the average being 1.98%.
The Zacks Consensus Estimate for 2022 earnings is pegged at $5.49, indicating a year-over-year improvement of 6.6% on 4.5% higher revenues of $7.5 billion. The consensus estimate for 2023 earnings is pegged at $5.89, which indicates a year-over-year improvement of 7.3% on 4.5% higher revenues of $7.8 billion.
The expected long-term earnings growth rate is pegged at 9.3%, better than the industry average of 9.1%. Business Tailwinds
ICE’s revenue should continue to benefit from its expansive product and service portfolio and estimates 5% to 6% growth in Fixed Income and Data Services recurring revenues.
Accelerated digitization has been taking place in the U.S. residential mortgage industry. ICE, with the largest mortgage network across the United States, should benefit from this structural shift. Its decision to buy Black Knight will help consolidate its presence as a provider of end-to-end electronic workflow solutions for the rapidly evolving U.S. residential mortgage industry. Intercontinental estimates Mortgage revenues to grow at an average annual growth rate of 8-10% over the next 10 years while the Mortgage Technology business is expected to grow in the low to mid-teens. Intercontinental’s impressive history of acquisitions has not only fueled its growth but also led it to achieve expense synergies. The buyout of mortgage-software firm Ellie Mae and the pending Black Knight buyout, once completed, should help ICE capitalize on the opportunities in the $14 billion addressable market. With over 5,000 indices representing more than $1 trillion in benchmark assets under management, ICE is the second-largest fixed income provider globally. A healthy and minimal risk-based balance sheet is likely to continue providing stability and buoyancy over the medium to long term while supporting strategic investments. By virtue of a strong balance sheet with solid cash and capital position, ICE’s dividend has more than doubled in the last six years. Stocks to Consider
Some better-ranked stocks from the same space are
HCI Group, Inc. ( HCI Quick Quote HCI - Free Report) , are American Financial Group, Inc. ( AFG Quick Quote AFG - Free Report) and W.R. Berkley Corporation ( WRB Quick Quote WRB - Free Report) . While HCI sports a Zacks Rank #1 (Strong Buy), AFG and WRB carry Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 30 days. In the past year, HCI Group stock has lost 18%. The Zacks Consensus Estimate for 2022 and 2023 earnings per share indicates year-over-year increases of 700% and 75%, respectively. American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has rallied 3.5%. The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 30 days. W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.76%. In the past year, W.R. Berkley's stock has surged 38.7%. The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.3% and 6.2% north, respectively, in the past 60 days.