Intercontinental Exchange’s ( ICE Quick Quote ICE - Free Report) compelling portfolio, expansive risk-management services, strategic buyouts, solid balance sheet, effective capital deployment and favorable growth estimates make it worth retaining in one’s portfolio. ICE, an operator of five cash equity exchanges and two equity options exchanges, has delivered 16 straight years of adjusted EPS increase, at a CAGR of 17%. Intercontinental has a solid surprise history, beating earnings estimates in the last five reported quarters, the average being 3%. Zacks Rank & Price Performance
Intercontinental currently carries a Zacks Rank #3 (Hold). Year to date, the stock has lost 21.8% compared with the
industry’s decline of 33.2%. Image Source: Zacks Investment Research Growth Estimates
The Zacks Consensus Estimate for Intercontinental's 2022 earnings is pegged at $5.36, indicating a year-over-year improvement of 4.1% on 2.8% higher revenues of $7.4 billion. The consensus estimate for 2023 earnings is pegged at $5.70, which indicates a year-over-year improvement of 6.3% on 4.8% higher revenues of $7.7 billion.
The expected long-term earnings growth rate is pegged at 7%. Growth Drivers
An expansive product and service portfolio should continue to drive Intercontinental’s top line. The addition of Black Knight is thus estimated to complement existing revenue streams and improve the mix of high-growth recurring revenues. ICE estimates 5-6% growth in Fixed Income and Data Services recurring revenues.
The U.S. residential mortgage industry has been witnessing accelerated digitization. ICE, with the largest mortgage network across the United States, is poised to benefit from this structural shift. The Black Knight acquisition will help consolidate ICE’s 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 rise 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 has an impressive history of acquisitions that has not only fueled growth but also helped achieve expense synergies. The acquisition of Ellie Mae and the pending Black Knight buyout, once completed, should help ICE capitalize on the opportunities in the $14-billion addressable market. With more than 5,000 indices representing more than $1 trillion in benchmark assets under management, ICE is the second-largest global fixed-income provider. 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 capital position, ICE’s dividends increased at a seven-year CAGR of 12.2%. Stocks to Consider
Some better-ranked stocks from the finance sector are
Cboe Global Markets ( CBOE Quick Quote CBOE - Free Report) , W.R. Berkley Corporation ( WRB Quick Quote WRB - Free Report) and Kinsale Capital Group, Inc. ( KNSL Quick Quote KNSL - Free Report) . While Cboe Global and W.R. Berkley sport a Zacks Rank #1 (Strong Buy), Kinsale Capital carries a Zacks Rank #2 (Buy) at present. You can see . the complete list of today’s Zacks #1 Rank stocks here The bottom line of Cboe Global surpassed earnings estimates in three of the last four quarters and missed in one, the average beat being 4.92%. Year to date, CBOE has lost 8.8%. The Zacks Consensus Estimate for Cboe Global’s 2022 and 2023 earnings has moved 2.7% and 3.9% north, respectively, in the past 30 days. The bottom line of W.R. Berkley surpassed estimates in each of the last four quarters, the average being 25.63%. Year to date, the insurer has gained 35%. The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings has moved 5.1% and 2.4% north, respectively, in the past 30 days. Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average being 15.16%. Year to date, Kinsale Capital has gained 30.4%. The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings implies a respective year-over-year rise of 27.5% and 21.9%.