Intercontinental Exchange’s (ICE Quick QuoteICE - Free Report) shares have gained 15% year to date, matching the industry but outperforming the Finance sector’s increase of 6.3%. With a market capitalization of $66.1 billion, the average volume of shares traded in the last three months was 2.2 million.

A compelling portfolio, expansive risk-management services, strategic buyouts, solid balance sheet and effective capital deployment continue to drive this Zacks Rank #2 (Buy) company.

The bottom line of this operator of five cash equity exchanges and two equity options exchanges has witnessed a 16-year CAGR of 17%.

Intercontinental has a solid surprise history, beating earnings estimates in three of the last four reported quarters, the average being 2.07%.

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Can It Retain the Momentum?

The Zacks Consensus Estimate for ICE’s 2023 earnings is pegged at $5.65, indicating an increase of 6.6% on 5.3% higher revenues of $7.7 billion. The consensus estimate for 2024 earnings is pegged at $6.11, indicating an increase of 8.3% on 5.5% higher revenues of $8.1 billion.

The long-term earnings growth rate is currently pegged at 8.8%, better than the industry average of 7.9%. We estimate the bottom line to increase at a three-year (2022-2025) CAGR of 4.6%.

Intercontinental’s revenues should continue to benefit from its expansive product and service portfolio. The addition of Black Knight complements existing revenue streams and improves the mix of high-growth recurring revenues. ICE estimates mid-single digit growth in Fixed Income and Data Services recurring revenues.

ICE, with the largest mortgage network across the United States, should benefit from accelerated digitization in the U.S. residential mortgage industry. The Black Knight buyout is a strategic fit. Intercontinental projects Mortgage revenues to grow at an average annual 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, which have not only fueled growth but also helped achieve expense synergies.

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 balance sheet with a solid cash and capital position, ICE has more than doubled its dividends in the last six years.

Other Stocks to Consider

Some other top-ranked stocks from the finance sector are CME Group (CME Quick QuoteCME - Free Report) , Cincinnati Financial Corporation (CINF Quick QuoteCINF - Free Report) and Kinsale Capital Group, Inc. (KNSL Quick QuoteKNSL - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

CME has a solid track record of beating earnings estimates in the last four quarters, the average being 2.92%. In the past year, CME has gained 21%.

The Zacks Consensus Estimate for CME’s 2023 and 2024 earnings per share is pegged at $9.04 and $9.16, indicating a year-over-year increase of 13.4% and 1.3%, respectively.

Cincinnati Financial has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 25.25%. In the past year, CINF has gained 9.3%.

The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share is pegged at $5 and $5.88, indicating a year-over-year increase of 17.9% and 17.6%, respectively.

Kinsale Capital beat estimates in each of the last four quarters, the average being 14.88%. In the past year, KNSL has rallied 56.6%.

The Zacks Consensus Estimate for 2023 and 2024 has moved 0.2% and 0.07% north, respectively, in the past seven days, reflecting analysts’ optimism.