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Here's Why Hold Strategy is Apt for Intercontinental (ICE)

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Intercontinental Exchange, Inc.’s (ICE - Free Report) strategic acquisitions, a solid balance sheet and effective capital deployment and favorable growth estimates make it worth retaining in one’s portfolio.

Growth Projections

The Zacks Consensus Estimate for Intercontinental Exchange’s 2023 earnings is pegged at $5.40, indicating a 1.8% increase from the year-ago reported figure on 3.2% higher revenues of $7.53 billion.

The consensus estimate for 2024 earnings stands at $5.85, indicating 8.4% increase from the year-ago reported figure on 5.3% higher revenues of $7.93 billion.

Earnings Surprise History

Intercontinental Exchange surpassed estimates in three of the last four reported quarters and missed in one with the average beat being 1.75%.

Zacks Rank & Price Performance

Intercontinental Exchange currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 24.4% compared with the industry’s decrease of 26.5%.

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Business Tailwinds

Intercontinental’s top line should continue to benefit from an expansive product and service portfolio. ICE remains focused on improving the mix of high-growth recurring revenues and therefore, the Black Knight buyout is in tandem with the growth strategy.

In Fixed Income and Data Services segment, ICE expects recurring revenue growth, excluding headwinds of nearly $15 million related to FX and the Euronext data center migration to be in the mid-single digits for 2023.

Intercontinental Exchange remains well-poised for growth, riding on accelerated digitization taking place in the U.S. residential mortgage industry to overcome several inefficiencies existing across mortgage origination workflow.

The Black Knight buyout will also 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 mid- to high-single digit growth of recurring revenues in the mortgage technology segment in 2023.

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.

The board has approved 11% hike in its quarterly dividend for the first quarter of 2023 to enhance shareholder value in February 2023. Banking on solid operational performance, ICE’s dividends increased at an eight-year (2016-2023) CAGR of 11.9%.

Stocks to Consider

Some better-ranked stocks from the finance sector are Ameriprise Financial, Inc. (AMP - Free Report) , AllianceBernstein Holding L.P. (AB - Free Report) and AssetMark Financial Holdings, Inc. (AMK - Free Report) . While Ameriprise Financial and AllianceBernstein sport a Zacks Rank #1 (Strong Buy), AssetMark Financial carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ameriprise Financial’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 5.50%. In the past year, Ameriprise Financial has rallied 10.3%.

The Zacks Consensus Estimate for AMP’s 2023 and 2024 earnings indicates 22.1% and 8.1% year-over-year growth, respectively.

AllianceBernstein’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 10.32%. In the past year, AB has lost 13.2%.

The Zacks Consensus Estimate for AB’s 2024 earnings indicates 3.97% year-over-year growth.

AssetMark Financial’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 7.95%. In the past year, AssetMark Financial has rallied 39.4%.

The Zacks Consensus Estimate for AMK’s 2023 and 2024 earnings indicates 24.2% and 6.2% year-over-year growth, respectively.

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