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Intercontinental Exchange (ICE) Q2 Earnings: What to Expect

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Intercontinental Exchange, Inc. (ICE - Free Report) is slated to report second-quarter 2018 results on Aug 2 before the market opens. Last reported quarter, the company delivered a positive earnings surprise of 2.27%.

Let’s see, how things are shaping up for this announcement.

Intercontinental Exchange is likely to report top-line growth in the to-be-reported quarter, driven by higher data revenues, accelerated growth in its listings business along with a growing open interest in revenue capture trends in the trading and clearing segment. The Zacks Consensus Estimate for revenue is pegged at $1.2 billion, representing an increase of 4.8% on a year-over-year basis.

Moreover, the company is expected to have displayed bottom-line rise, driven by probable higher revenues, expense management, contributions from strategic investments and a lower tax rate. Continued share buyback might have boosted the bottom line. The Zacks Consensus Estimate for the metric is pegged at 89 cents per share, reflecting an 18.7% rise from the year-ago quarter.

On the basis of the consistent solid performance at pricing and reference data services, the company is likely to have witnessed an improvement in data revenues in the to-be-reported quarter. The Zacks Consensus Estimate for data service fees stands at $527 million, up 1.2% year over year.

The company is likely to have reported revenue growth in trading and clearing segment, mainly fueled by volume growth and a resilient revenue per contract (RPC), which gained from a favorable product mix.

Notably, Intercontinental Exchange delivered a record average daily volume (ADV) in the second quarter.  

Intercontinental Exchange’s probable increase in expenses is attributable to higher compensation and benefits, technology and communication as well as selling, general and administrative expenses. This in turn, might restrict margin expansion, hurting the company’s overall performance in turn.

For the second quarter, the company projects adjusted operating expenses to range between $500 million and $510 million while interest expense is expected to be $55 million in the same time frame.

What the Quantitative Model Predicts

Our proven model does not conclusively show that Intercontinental Exchange is likely to beat on earnings this to-be-reported period. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Intercontinental Exchange has an Earnings ESP of -0.04%, which decreases the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.  

Zacks Rank: Intercontinental Exchange carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company needs to have a positive ESP to be confident about an earnings surprise. Therefore, this combination leaves surprise prediction inconclusive.

We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks worth considering from the finance sector with the right combination of elements to surpass estimates this time around are as follows:

Athene Holding Ltd. is set to report second-quarter earnings on Aug 2 and has an Earnings ESP of +1.12%. The company is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

Brighthouse Financial, Inc. (BHF - Free Report) has an Earnings ESP of +0.94% and a Zacks Rank of 3. The company is set to announce second-quarter earnings on Aug 6.   

Argo Group International Holdings, Ltd. has an Earnings ESP of +1.70% and is a Zacks #3 Ranked stock. The company is expected to announce second-quarter earnings on Aug 6.

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