What Awaits Intercontinental Exchange (ICE) in Q3 Earnings?

Intercontinental Exchange Group ICE is slated to report third-quarter 2020 results on Oct 29, before market open. The company beat estimates in each of the last four quarters, delivering an average beat of 4.63%.

Let’s see how things have shaped up for this announcement.

Diversified asset class, balanced mix of recurring and transaction-based revenues, continued growth across its business lines and market volatility are expected to have benefited third quarter results of Intercontinental Exchange.

Revenues are likely to have benefited from higher interest income, higher regulatory fees, the, growth in futures exchange data and consolidated feed offering, growth in connectivity services. The Zacks Consensus Estimate for revenues is pegged at $1.4 billion, indicating 2.4% increase from the year-ago reported figure.

The company estimates the continued momentum in data revenue growth to drive global data services, pricing & analytics as well as desktops and connectivity solutions. Data services revenues are expected to increase sequentially in the range of $575 million to $580 million in the to-be-reported quarter.

The company expects annual subscription value (ASV) growth to increase in the third quarter.

Pricing & analytics is likely to have benefited from continued strong contributions from fixed income index business, robust customer demand for pricing and reference data products, strong retention rate of existing customers, addition of customers, increased purchases by existing customers and increases in pricing of products.

Under fixed income and credit business, Mortgage Services revenues are likely to have benefited from strong refinancing trends, acquisition of Simplifile as well as continued adoption of digital mortgage solution.
In the third quarter, Intercontinental Exchange delivered solid average daily volume. Third-quarter heating oil ADV increased 184% year over year and RBOB gasoline increased 261% year over year.

European natural gas ADV was up 5% year over year. North American natural gas ADV rose 9% year over year.

Expenses are likely to have been on the higher side due to increase in compensation and benefits, professional services, acquisition-related transaction and integration as well as technology and communication costs, rent and occupancy, and selling, general and administrative expenses. This, in turn, might have restricted margin expansion and hurt the company’s overall performance. Adjusted operating expense are estimated in the range of $580 million to $590 million in the third quarter.

The company estimates third-quarter adjusted expenses to be in the range of $580 million to $590 million.

The Zacks Consensus Estimate for earnings is pegged at 99 cents, indicating a decline of 6.6% from the prior-year quarter reported figure.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Intercontinental Exchange this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case as you can see below.

Earnings ESP: Intercontinental Exchange has an Earnings ESP of -1.12%. This is because the Most Accurate Estimate of 98 cents is pegged lower than the Zacks Consensus Estimate of 99 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Intercontinental Exchange Inc. Price and EPS Surprise

Intercontinental Exchange Inc. Price and EPS Surprise

Intercontinental Exchange Inc. price-eps-surprise | Intercontinental Exchange Inc. Quote

Zacks Rank: Intercontinental Exchange currently carries a Zacks Rank of 3.

Stocks to Consider

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

Cardtronics PLC CATM has an Earnings ESP of +18.42% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Envestnet, Inc ENV has an Earnings ESP of +2.35% and a Zacks Rank #2.

International Money Expres, Inc. IMXI has an Earnings ESP of +6.45% and a Zacks Rank of 2.

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