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Here's Why Investing in Intercontinental (ICE) is Prudent Now

Zacks.com logo Zacks.com 1/7/2022

Intercontinental Exchange, Inc. ICE has been gaining momentum, given the company's solid segmental performance, strategic acquisitions and strong capital position.

Growth Projections

The Zacks Consensus Estimate for Intercontinental Exchange’s 2022 earnings per share is pegged at $5.62, indicating a year-over-year increase of nearly 9.8%. Intercontinental Exchange’s expected long-term earnings growth rate is 10.3%, better than the industry average of 9.5%.

Earnings Surprise History

Intercontinental Exchange surpassed estimates in each of the last four reported quarters, with the average beat being 3.11%.

Estimate Revision

The Zacks Consensus Estimate for 2022 earnings has moved 0.7% north in the past 30 days, reflecting analyst optimism.

Zacks Rank & Price Performance

Intercontinental Exchange currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 13.2% compared with the industry’s increase of 0.5%.

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Business Tailwinds

Higher interest rate business, increased energy revenues, including oil complex and European natural gas revenues as well as growth in energy, increase in revenues related to global environmental products, and growth across financial futures and options complex should continue to fuel the Exchange segment of Intercontinental Exchange.

The company guided recurring revenues of the Exchange segment in the range of $330 million to $335 million in the fourth quarter.

Increased fixed income, data and analytics business, double-digit growth in the index franchise, other data and network services growth, continued customer demand for additional network capacity should boost the top line of the Fixed Income and Data Services segment.

For the fourth quarter, ICE expects recurring revenues to improve sequentially in the range of $415 million to $420 million and full-year revenue growth to be around 6% at the high end of the guidance range.

Combination of new customer growth, existing customer expansion and adoption of digital workflow tools are estimated to drive the recurring revenues of the Mortgage Technology segment.

In the fourth quarter, recurring revenues are expected to grow in the range of $147 million to $152 million.

The Intercontinental Exchange’s series of acquisitions contributed to its growth trajectory. ICE remains focused on accelerating growth with acquisitions to strengthen its competitive position globally, broaden product offerings and services as well as support growth.

Intercontinental Exchange boasts strong liquidity and capital position. Solid cash flows along with the divestment of a $1.2 billion stake in Coinbase have enabled the security exchange to lower leverage to below 3.25 times at third-quarter end.

The security exchange remains on track to meet the needs of customers, drive growth and create value for shareholders. ICE guided to resume share repurchases worth up to $250 million in the fourth quarter.

Other Stocks to Consider

Some other top-ranked stocks from the finance sector include OTC Markets Group OTCM, Usio USIO and Green Dot GDOT. While OTC Markets and Usio sport a Zacks Rank #1 (Strong Buy), Green Dot carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for OTC Markets Group’s 2022 earnings has moved up 14.8% in the past 60 days. The expected long-term earnings growth rate is pegged at 9%. OTC Markets Group’s earnings surpassed estimates in three of the last four quarters and missed in one, the average beat being 41.39%.

The Zacks Consensus Estimate for Usio’s 2022 earnings per share indicates a year-over-year increase of 66.6%. Usio’s earnings surpassed estimates in each of the last four quarters, the average beat being 81.25%.

Green Dot’s earnings surpassed estimates in three of the last four quarters and missed in one, the average beat being 37.57%. The Zacks Consensus Estimate for GDOT’s 2022 earnings per share indicates a year-over-year increase of 17.3%. It has a favorable VGM Score of B.

Shares of OTCM and USIO have rallied 66.3% and 23.5%, respectively, while GDOT stock has lost 39.7% in the past year. 

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