Intercontinental Exchange ICE is well-poised for growth given compelling portfolio, broad range of risk management services, solid customer retention and solid capital position.
Shares of Intercontinental Exchange have gained 3.8% year to date compared with the industry's increase of 1.8%. The Zacks S&P 500 composite has however lost 10.9% in the said time frame. The Zacks Consensus Estimate for 2020 and 2021 earnings indicates 15.7% and 3.2% growth, respectively, from the year-ago reported figure. The expected long-term earnings growth rate is 8.1%, higher than the industry’s average of 6.8%.
The Zacks Rank #2 (Buy) leading global operator of regulated exchanges, clearing houses and listings venues, and a provider of data services has seen its estimates for 2020 and 2021 move up 1.6% and 0.4%, respectively in the past 30 days, reflecting investor optimism.
The company’s return on equity of 13.9% has improved over the past three years and is higher than 12.2% for the industry, reflecting the company’s tactical efficiency in using shareholder funds.
This company has a solid history of delivering positive surprise with four quarter average beat being 4.46%.
Intercontinental Exchange should continue to deliver growth on the strength of its Trading and Clearing, Data and Listings and Futures & Options business. The first quarter of 2020 was the strongest in its history with each business delivering revenue growth.
The company estimates data services to generate revenues in the range of $565 million to $570 million in the second quarter and $2.29 billion to $2.33 billion in 2020 on the back of mission-critical Pricing & Analytics and connectivity offering. Intercontinental Exchange anticipates growth in Pricing & Analytics to be stable in the second quarter and increase through the rest of 2020.
A healthy and minimal risk-based balance sheet is likely to provide stability over the medium to long term. The company generates solid cash flows that in turn helps in effective capital deployment.
Further, the company’s shares are trading cheap presently. Its price to earnings ratio is 21.1, lower than the industry average of 24.4. Undervalued stock with strong fundamentals and growth potential are always viable investment options.
Other Stocks to Consider
Investors interested in the same industry can look at other top-ranked stocks like CME Group CME, Cboe Global Markets CBOE and MarketAxess Holdings MKTX.
MarketAxess operates an electronic trading platform that enables fixed-income market participants to trade corporate bonds and other types of fixed-income instruments worldwide. The company delivered a positive surprise of 3.70% in the last reported quarter. It sports Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CME operates contract markets for the trading of futures and options on futures contracts worldwide. The company delivered 4.48% positive surprise in the last reported quarter. The company has a Zacks Rank #2.
Cboe Global operates as an options exchange in the United States. The company delivered a positive surprise of 7.14% in the last reported quarter. The company has a Zacks Rank #2.
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Cboe Global Markets, Inc. (CBOE) : Free Stock Analysis Report
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