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What's in Store for Intercontinental Exchange (ICE) in Q1?

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Intercontinental Exchange, Inc.ICE is slated to report first-quarter 2018 results on May 3 before the market opens. In fourth-quarter 2017, the company delivered a positive earnings surprise of 1.39%.

Let's see, how things are shaping up for this announcement.

Intercontinental Exchange is likely to report top-line growth in the soon-to-reported quarter, driven by higher data revenues, accelerated growth in its listings business along with a growing open interest in revenue capture trends in the trading and clearing segment. The Zacks Consensus Estimate for the metric is pegged at $1.2 billion, representing an increase of 4.8% on a year-over-year basis.

The company is expected to reap the benefits of a lowered tax rate (ranging between 22% and 25%), which is anticipated to favorably impact the company's bottom line and drive its margin expansion.

Also, continued share buyback might have boosted the bottom line.

The Zacks Consensus Estimate for the metric is pegged at 88 cents per share, reflecting an 18.9% rise from the year-ago quarter.

On the basis of the company's portfolio of proprietary pricing data, reference data, analytics, indices, futures data and desktops plus connectivity solutions, the data revenues might have increased. The Zacks Consensus Estimate for data service fees stands at $524 million, up 0.8% year over year.

The company is likely to have reported revenue growth in trading and clearing segment, mainly fueled by volume growth and a resilient revenue per contract (RPC), which gained from a favorable product mix.

Further, Intercontinental Exchange is likely to witness organic growth in listings revenues (excluding the impact of the sale of NYSE Governance Services).

Intercontinental Exchange's probable increase in expenses is attributable to higher compensation and benefits, technology and communication as well as selling, general and administrative expenses. This in turn might restrict margin expansion, hurting the company's overall performance in turn.

Nonetheless, the company estimates to generate around half of the remaining $60 million in synergies (after delivering more than $70 million in 2017) during 2018.

Notably, Intercontinental Exchange delivered record average daily volume (ADV) in the first quarter.

Intercontinental Exchange Inc. Price and EPS Surprise

Intercontinental Exchange Inc. Price and EPS Surprise | Intercontinental Exchange Inc. Quote

What the Quantitative Model Predicts

Our proven model does not conclusively show that Intercontinental Exchange is likely to beat on earnings this to-be-reported period. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP : Intercontinental Exchange has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 88 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter .

Zacks Rank : Intercontinental Exchange carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company's 0.00% ESP makes surprise prediction difficult.

We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks worth considering from the finance sector with the right combination of elements to surpass estimates this time around are as follows:

Cigna Corporation CI is set to report first-quarter earnings on May 3. The stock has an Earnings ESP of +0.62% and a Zacks Rank of 3. You can see the complete list of today's Zacks #1 Rank stocks here .

National General Holdings Corp. NGHC has an Earnings ESP of +5.59% and is a Zacks #1 Ranked player. The company is slated to release first-quarter earnings on May 7.

Apollo Investment Corporation AINV has an Earnings ESP of +1.08% and is a Zacks #2 Ranked player. The company is slated to release first-quarter earnings on May 18.

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Apollo Investment Corporation (AINV): Free Stock Analysis Report

Cigna Corporation (CI): Free Stock Analysis Report

National General Holdings Corp (NGHC): Free Stock Analysis Report

Intercontinental Exchange Inc. (ICE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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