Intercontinental Exchange Stock To Edge Past the Expectations In Q4

ICE: Intercontinental Exchange logo
Intercontinental Exchange

Intercontinental Exchange (NYSE: ICE) is scheduled to report its fiscal Q4 2022 results on Thursday, February 2, 2023. We expect Intercontinental Exchange to edge past the consensus estimates of revenues and earnings. The exchange surpassed the street expectations in the last quarter, with net revenues (total revenues minus transaction-based expenses) increasing by 1% y-o-y to $1.81 billion. It was primarily due to growth in exchange-driven revenues and fixed income & data services category, partially offset by lower mortgage technology income. We expect the same trend to continue in Q4.

Our forecast indicates that Intercontinental Exchange’s valuation is $127 per share, which is 19% above the current market price of $107. Our interactive dashboard analysis on Intercontinental Exchange’s Earnings Preview has more details. 

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(1) Revenues expected to top the consensus estimates

Intercontinental Exchange’s revenues increased 6% y-o-y to $7.26 billion in the first three quarters of 2022, translating into a 4% rise in net revenues to $5.52 billion. It was primarily driven by a 10% y-o-y rise in the net clearing & transaction fees, followed by a marginal growth in non-trading revenues.

  • Clearing & transaction fees (net) increased 10% y-o-y to $2.05 billion in the first nine months of 2022. Q1 2022. We expect the same momentum to continue in the fourth quarter.
  • ICE generates approximately 60% of its net revenues from non-trading income. The segment posted marginal growth in the first three quarters of the year. It was mainly due to lower mortgage technology revenues, offsetting the improvement in fixed-income and data services businesses. We expect the non-trading revenues to see positive growth in Q4.
  • Overall, we forecast Intercontinental Exchange’s total revenues to touch $9.6 billion for FY2022.

Trefis estimates Intercontinental Exchange’s fiscal Q4 2022 net revenues to be around $1.80 billion, 1% above the $1.78 billion consensus estimate. 

2) EPS to marginally beat the consensus estimates

Intercontinental Exchange Q3 2022 adjusted earnings per share (EPS) is expected to be $1.28 per Trefis analysis, marginally above the consensus estimate of $1.26. The exchange’s adjusted net income was reduced by 60% y-o-y to $1.02 billion in the first nine months of 2022. It was primarily due to a significant drop in the “other income” from $1.02 billion to -$1.53 billion. That said, we expect the profitability numbers to see some improvement in Q4. Overall, Intercontinental Exchange’s annual EPS figure is likely to be around $5.32 for FY2022. 

(3) Stock price estimate is 19% higher than the current market price

We arrive at Intercontinental Exchange’s valuation, using an EPS estimate of around $5.32 and a P/E multiple of just below 24x in fiscal 2022. This translates into a price of $127, which is 19% above the current market price of around $107. 

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year 

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jan 2023
MTD [1]
YTD [1]
Total [2]
 ICE Return 4% 4% 89%
 S&P 500 Return 5% 5% 80%
 Trefis Multi-Strategy Portfolio 9% 9% 243%

[1] Month-to-date and year-to-date as of 1/31/2023
[2] Cumulative total returns since the end of 2016

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