Intercontinental Exchange Group Inc . ICE is poised for growth, given its strength in global data services, diverse liquid, global derivatives and equities markets across 12 exchanges, six clearing houses and nine asset classes. This Zacks Rank #2 (Buy) exchange operator remains promising, banking on several growth prospects.
Growth Projections : The Zacks Consensus Estimate for 2018 earnings per share is pegged at $3.37 on revenues of $4.95 billion. While the top line improves 6.3% year over year, the bottom line rises 14.2%.
Intercontinental Exchange has expected long-term earnings per share growth of 10.2%.
Price Performance : Shares of Intercontinental Exchange have rallied 24.8% in a year, outperforming industry 's growth of 8.8% and higher than the S&P 500 index's 20% gain.
Northbound Estimate : The stock has seen the Zacks Consensus Estimate for 2018 earnings being revised 0.3% upward over the last 60 days.
Positive Earnings Surprise History : Intercontinental Exchange has surpassed the Zacks Consensus Estimate in three of the last four quarters with an average beat of 1.42%.
The company is expected to report fourth-quarter results in the first week of February. Our proven model shows that Intercontinental Exchange is likely to beat estimates this quarter based on the ideal combination of two strong ingredients: a Zacks Rank #2, which increases the predictive power of ESP, and an Earnings ESP of +0.23% that makes us confident of a likely positive earnings surprise.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter .
Underpriced : Looking at the company's price-to-book ratio - the best multiple for valuing securities exchanges because of large variations in their earnings results from one quarter to the next - shares are underpriced at the current level. The company has a trailing 12-month P/B ratio of 2.57, falling below the industry average of 2.85. In fact undervalued shares with growth prospects are the best investment bets.
Growth Drivers in Place
Intercontinental Exchange remains well-poised for growth, banking on a compelling suite of products and a broad range of risk management services. The company continues to generate an improved top line, fueled by product and service suit along with strategic acquisitions.
Average daily volumes continue to trend higher, driving trading and clearing segment revenues. Its solid energy franchise and increasing recurring market data revenues are expected to retain the momentum.
Strategic acquisitions have been driving global diversification and helping to tap new opportunities in the emerging economies for Intercontinental Exchange. Further, acquisitions have led to achieving its expense synergies.
A strong operational performance helps the company enjoy a healthy capital position. This in turn supports its effective capital deployment including shareholder-friendly moves. Last year's dividend hike had marked the third consecutive double-digit increase since its initiation in December 2013. The company also has $1.2 billion share buyback program under its authorization.
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