On Dec 16, 2013, shares of
IntercontinentalExchange Group, Inc
) hit a 52-week high of $222.39.
The momentum was driven by continued outperformance, enhanced
guidance, and continuing efforts to grow.
IntercontinentalExchange's third quarter-quarter 2013 earnings of
$1.97 per share modestly exceeded the Zacks Consensus Estimate by
7.6% and the year-ago quarter figure by 10%. Results reflected
and other businesses that drove the top line.
Management revised expense guidance for 2013, anticipating
operating expense to be up by 1-2% over 2012, lower than the
prior band of 2-3%.
With respect to earnings trend, IntercontinentalExchange
delivered positive earnings surprise in the past 4 quarters, with
an average of 4.1%.
IntercontinentalExchange completed the acquisition of NYSE
Euronext Inc. last month for $11.0 billion. The acquisition has
further strengthened the company's operational base to 16 global
exchanges and 5 central clearing houses. The merger is expected
to generate more than 15% of earnings accretion within the first
year of completion of the deal.
Management projects run-rate expenses synergies of about $450
million, to be reaped in the second year of the merger. The
acquisition will provide IntercontinentalExchange with a strong
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IntercontinentalExchange is also eyeing Asia with its announced
intention to buy Singapore Mercantile Exchange (SMX). The deal
further extends ICE's growth curve and amplifies its global
ICE's November daily futures volume registered an increase of 5%.
Valuation for IntercontinentalExchange looks stretched. The
shares are trading at a premium to the peer group average both on
a price-to-book basis and on a forward price-to-earnings basis.
Return on equity is lower than the peer group average. However,
year-to-date return from the stock was 79.2%, much above the
S&P's return of 27.4%.
IntercontinentalExchange presently carries a Zacks Rank #2 (Buy).
Some other stocks worth considering in the finance sector include
Hallmark Financial Services Inc
Brookfield Asset Management Inc.
). All these sport Zacks Rank #1 (Strong Buy).