What Should Investors Know About Intercontinental Exchange, Inc.’s (NYSE:ICE) Future?

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As Intercontinental Exchange, Inc. (NYSE:ICE) announced its recent earnings release on 31 December 2018, it seems that analyst forecasts are fairly bearish, with profits predicted to drop by -0.7% next year against the past 5-year average growth rate of 30%. Currently with a trailing-twelve-month profit of US$2.0b, the consensus growth rate suggests that earnings will drop to US$2.0b by 2020. Below is a brief commentary on the longer term outlook the market has for Intercontinental Exchange. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Intercontinental Exchange

How is Intercontinental Exchange going to perform in the near future?

The longer term view from the 16 analysts covering ICE is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of ICE’s earnings growth over these next few years.

NYSE:ICE Past and Future Earnings, February 21st 2019
NYSE:ICE Past and Future Earnings, February 21st 2019

From the current net income level of US$2.0b and the final forecast of US$2.3b by 2022, the annual rate of growth for ICE’s earnings is 4.9%. This leads to an EPS of $4.34 in the final year of projections relative to the current EPS of $3.46. In 2022, ICE’s profit margin will have expanded from 40% to 41%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Intercontinental Exchange, there are three pertinent factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Intercontinental Exchange worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Intercontinental Exchange is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Intercontinental Exchange? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.