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Why Is Intercontinental Exchange (ICE) Up 1.1% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for Intercontinental Exchange Inc. (ICE - Free Report) . Shares have added about 1.1% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is ICE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Intercontinental Exchange (ICE - Free Report) Q1 Earnings Top, Rise Y/Y

Intercontinental Exchange reported first-quarter 2018 adjusted earnings per share of 90 cents, beating the Zacks Consensus Estimate of 88 cents by 2.3%. Also, the bottom line improved 21.6% on a year-over-year basis.

The quarter witnessed strong performance across trading and clearing as well as data and listings segments, while delivering record revenues.

Notably, the company closed the strategic buyout of BondPoint and also produced solid organic growth.

On a GAAP basis, net income was 79 cents per share, which declined 5.9% year over year.

Performance in Detail

Intercontinental Exchange’s revenues of $1.23 billion increased 5.1% year over year on higher revenues at transaction and clearing, plus net and listings segments as well as other revenues. Moreover, the top line outpaced the Zacks Consensus Estimate of $1.22 billion by 0.4%.

Total operating expenses decreased 1.5% year over year to $575 million, primarily driven by lower compensation and benefits, professional services, acquisition-related transaction and integration costs, rent and occupancy as well as selling, general and administrative expenses. Adjusted operating expenses were $494 million in the first quarter, down 0.6% from the year-ago quarter.

Operating income improved 11.7% to $650 million.

Financial Update

As of Mar 31, 2018, Intercontinental Exchange had cash and cash equivalents of $523 million, down 2.2% from the level as of Dec 31, 2017. Long-term debt of $4.3 billion remained flat with the 2017-end level.

Total equity was $17 billion as of Mar 31, 2018, which inched up 0.1% from $16.9 billion as of Dec 31, 2017.

Guidance

Adjusted operating expenses are estimated between $500 million and $510 million for the second quarter of 2018 and between $2 billion and $2.04 billion for 2018.

Operating expenses are projected between $570 million and $580 million for the second quarter of 2018 and in a range of $2.28-$2.32 billion for the full year.

Interest expense is anticipated at $55 million in the second quarter of 2018.

Intercontinental Exchange’s share count for the second quarter is likely to be in the band of $581-$583 million weighted average shares outstanding and between $580 million and $585 million for 2018.

Our Take

Intercontinental Exchange boasts a stellar performance in earnings results. The company remains well-poised for growth on the back of its strength in energy franchise, rising recurring market data revenues as well as growth-driving strategic initiatives. The company focuses on building its growth trajectory, customer service and value creation for our stockholders.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.

VGM Scores

At this time, ICE has a subpar Growth Score of D. Its Momentum is doing a bit better with a C. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, ICE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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