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Why Is Intercontinental Exchange (ICE) Up 3.6% Since Its Last Earnings Report?

A month has gone by since the last earnings report for Intercontinental Exchange Inc.ICE . Shares have added about 3.6% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is ICE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Intercontinental Exchange (ICE) Q4 Earnings Beat & Up Y/Y

Intercontinental Exchange, Inc. reported fourth-quarter 2017 adjusted earnings per share of 73 cents, beating the Zacks Consensus Estimate by 1.39%. Also, the bottom line improved 2.8% on a year-over-year basis.

The quarter witnessed increase in data service revenues. Lower expenses aided operating margin expansion.

On a GAAP basis, net income was $2.08 cents per share, rising more than three-fold year over year.

Performance in Detail

Intercontinental Exchange's revenues of $1.14 billion inched up 0.5% year over year on higher data service revenues as well as other revenues. The top line lagged the Zacks Consensus Estimate of $1.15 billion.

Total operating expenses decreased 4.8% year over year to $552 million, primarily driven by lower compensation and benefits, professional service, acquisition-related transaction as well as integration costs. Adjusted operating expenses were $479 million in the fourth quarter.

Operating income improved 6.1% to $592 million.

Full-Year Highlights

Intercontinental Exchange reported 2017 adjusted earnings per share of $2.95, surpassing the Zacks Consensus Estimate of $2.94. The bottom line improved 6.1% over 2016.

Intercontinental Exchange's revenues of $4.6 billion grew 2.9% year over year. Results were in line with the Zacks Consensus Estimate. Top line logged a record figure for the twelfth straight year.

Financial Update

At the end of 2017, Intercontinental Exchange had cash and cash equivalents of $535 million, up 31.4% from Dec 31, 2016. Long-term debt of $4.3 billion increased 10.2% from the 2016-end level.

Total equity was $16.9 billion as of Dec 31, 2017 compared with $15.7 billion as of Dec 31, 2016.

Cash flows from operations were $2.1 billion for 2017. Operational capital expenditures in 2016 were $179 million.

Guidance

Adjusted operating expenses in 2018 are estimated between $495 million and $505 million in the first quarter of 2018 and between $2 billion and $2.05 billion for 2018.

Interest expense is projected at $52 million in the first quarter of 2018.

2018 Expense Synergies is estimated at about $30 million.

2018 Capital Expenditures are projected between $300 million and $330 million.

Intercontinental Exchange's share count for the first quarter is likely to be in the range of $525-$592 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimate. There have been three revisions lower for the current quarter.

Intercontinental Exchange Inc. Price and Consensus

Intercontinental Exchange Inc. Price and Consensus | Intercontinental Exchange Inc. Quote

VGM Scores

At this time, ICE has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. Following the exact same course, the stock was also allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, ICE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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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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