ICE Group's second-quarter earnings topped the Zacks Consensus
Estimate but lagged the prior-year quarter figure due to lower
volumes and higher expenses, which also deteriorated margins. Top
line surged year over year due to NYSE acquisition but also showed
absence of comparable growth parameters. Intense competition,
challenging regulations and volatile industry trends also raise
concerns. However, incremental cash flow boost efficiencies, paving
way for strategic acquisitions and divestments, product novelty and
global expansion. Resumption of share buybacks also support high
earnings visibility. Although strong product portfolio, disciplined
investment, debt reduction and improvement in industry dynamics
should enable ICE Group to deliver strong shareholder value in the
long run, near term remains cautious, justifying our Underperform
Post the acquisition of NYSE Euronext Inc. in Nov 2013 for about
$11 billion, a new holding company - IntercontinentalExchange Group
Inc. (ICE Group) - was formed to affect the cash and stock merger
between IntercontinentalExchange Inc. and NYSE. ICE Group funded
the transaction by 67% in shares and 33% in cash, which was raised
through cash and credit facilities. After the acquisition, the NYSE
now owns 36% in IntercontinentalExchange, while four members of the
former will be part of ICE Group's board. However, both
IntercontinentalExchange and NYSE businesses will continue to
operate under their respective brand names.
ICE Group has dual-headquarters in Atlanta and New York and
operates through 17 globally regulated exchanges, with a total of
4,232 employees at the end of 2013. Established in 2000 and
headquartered in Atlanta, Georgia, IntercontinentalExchange Inc.
owns and operates an Internet-based global electronic marketplace
for trading in futures, and over-the-counter (OTC) commodities and
derivative financial products. The company is an electronic futures
and OTC marketplace for trading in a broad array of energy, soft
agricultural and agricultural commodities, credit default swaps
(CDS) and financial products.
The transatlantic exchange operates leading regulated exchanges,
trading platforms and clearing houses serving the global markets
for agricultural, credit, currency, emissions, energy and equity
index markets. Through its subsidiaries, the company serves
professional traders, financial institutions, institutional and
individual investors, corporations, manufacturers, commodity
producers and refiners, and governmental bodies. In 2005,
IntercontinentalExchange completed its initial public offering on
the New York Stock Exchange and became a member of the Russell 1000
and the S&P 500 indexes.
Headquartered in New York and consummated in Apr 2007, NYSE
Euronext Inc. was formed with the merger of NYSE Group Inc., a
Delaware corporation and Euronext N.V., a company organized under
the laws of the Netherlands. The company offers a broad and growing
array of products and services in cash equities, futures, options,
swaps, exchange-traded fund (ETF) products, bonds, market data and
commercial technology solutions, all designed to meet the evolving
needs of issuers, investors, financial institutions and market
Following the acquisition of NYSE, ICE Group generates revenues
from four primary sources:
Transaction and Clearing Fees (accounted for 78% of 2013 total
Market Data Fees (12%)
Listing Fees (2%)
Other Revenue (8%)
Through its Futures operations, ICE Group offers trading in
standardized derivative contracts on its regulated exchanges
through ICE Futures U.S., ICE Futures Europe and ICE Futures
Canada, NYSE Liffe, NYSE Liffe U.S. and ICE Endex.
The OTC operation provides trading in over-the-counter or
off-exchange, energy-related products, and derivative contracts,
including contracts that provide for the physical delivery of an
underlying commodity or for financial settlement based on the price
of an underlying commodity. ICE Group's OTC markets include ICE OTC
Energy, Creditex and ArcaEdge.
ICE Group's Cash exchanges offer trading within ETFs, equity and
interest rate indices as well as equity options. These markets
include New York Stock Exchange, NYSE Arca, NYSE MKT, NYSE Euronext
Exchanges, EnterNext, NYSE Alternext, NYSE Arca Europe, NYSE Amex
Options, NYSE Arca Options and NYSE Bonds.
ICE Group also offers central Clearing facilities through ICE
Clear Europe, ICE Clear U.S., ICE Clear Canada, ICE Clear Credit
and The Clearing Corp. In Jul 2013, NYSE Liffe's both trading and
clearing operations were successfully merged into ICE Clear Europe,
which is UK's first clearinghouse.
IntercontinentalExchange Group Inc. (ICE): Read the
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