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Intercontinental (ICE) Shares Rise 8% YTD: More Room to Grow?

Intercontinental Exchange’s ICE shares have gained 7.8% year to date, outperforming the industry’s increase of 2.3%, the Finance sector’s rise of 0.8% and the Zacks S&P 500 composite’s rally of 5.2%. With a market capitalization of $79.3 billion, the average volume of shares traded in the last three months was 2.5 million.

A compelling portfolio, expansive risk-management services, strategic buyouts, solid balance sheet and effective capital deployment continue to drive ICE’s shares.

Earnings of ICE grew 10% in the last five years, better than the industry average of 9.8%. Intercontinental has a solid surprise history, beating earnings estimates in the last four reported quarters, the average being 3.12%.

The Zacks Consensus Estimate for 2024 earnings is pegged at $5.91, indicating an increase of 5.2% year over year on 15.2% higher revenues of $9.2 billion. The consensus estimate for 2025 earnings is pegged at $6.56, implying an upside of 11% on 5.4% higher revenues of $9.7 billion. The long-term earnings growth rate is currently pegged at 9.5%.

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Zacks Investment Research

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Can it Retain the Momentum?

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, which carries a Zacks Rank #3 (Hold).

ICE’s top line continues to benefit from an expansive and compelling product and service portfolio. The Black Knight acquisition 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 has an impressive inorganic growth story, which has also helped it achieve expense synergies.

ICE, with the largest mortgage network across the United States, remains well poised to benefit from accelerated digitization in the U.S. residential mortgage industry. 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. ICE estimates mid-to-high-single-digit growth in recurring revenues in the mortgage technology segment in 2024.

Its 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.

A solid capital position aids ICE in boosting shareholders' value by buying back shares and raising dividends. While ICE has more than doubled its dividends in the last six years, it has $2.5 billion remaining under its authorization kitty.

The Zacks Consensus Estimate for 2024 and 2025 has moved 1.7% and 2.5% north, respectively, in the past 30 days, reflecting analysts’ optimism.

Stocks to Consider

Some top-ranked stocks from the finance sector are Cboe Global Markets CBOE, Coinbase Global COIN and Berkshire Hathaway Inc. (BRK.B).

Coinbase has a decent track record of beating earnings estimates in the last four quarters. COIN stock has climbed 360.8% year to date. The Zacks Consensus Estimate for COIN’s 2024 earnings per share indicates a year-over-year increase of 173%. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Estimates for Cboe Global’s 2024 and 2025 earnings per share indicate a year-over-year increase of 6.4% and 6.3%, respectively. Year to date, CBOE has gained 9.7%. The expected long-term earnings growth rate is 13.6%, better than the industry average of 8.9%.  It carries a Zacks Rank #2 (Buy).

Berkshire delivered a trailing four-quarter average earnings surprise of 32.22%. Year to date, the stock has risen 19.8%. The Zacks Consensus Estimate for BRK.B’s 2024 and 2025 earnings suggests a year-over-year rise of 7.7% and 15.3%, respectively. It carries a Zacks Rank #2.


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Coinbase Global, Inc. (COIN) : Free Stock Analysis Report

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