Founded in 2000 and located in Atlanta, Georgia Intercontinental Exchange Inc. is a company that operates a vast range of regulated exchanges and clearing houses throughout the global markets. With exchanges located in the North America, United Kingdom, Europe, Israel, and Singapore (ICE) operates exchanges that trade a wide variety of securities from commodities, interest rates, to equities and currencies. Some of the exchanges that they operate are the NYSE, ICE Futures Europe, and NYSE ARCA as well as markets for physical-energy and credit default swaps.
For the fourth quarter, following the closing of ICE’s acquisitions of Trayport and Interactive Data Corporation on December 11 and 14, respectively, ICE expects a small revenue increase in the range of $48 million to $52 million, which will be included in data services revenue. ICE expects incremental fourth quarter adjusted operating expenses related to the acquisitions in the range of $33 million to $35 million.
ICE issued approximately 9.0 million common shares as part of the consideration for the Interactive Data Corporation and Trayport acquisitions. Trayport was designed for inter-dealer brokers as a price dissemination platform, their GlobalVision product range has evolved and can now be used to trade commodities in any market configuration.
This acquisition has resulted in a total shares outstanding of 119 million on December 31, 2015; fourth quarter weighted average shares outstanding were approximately 112 million shares. ICE also cleared $2.7 trillion in gross notional value of CDS in the fourth quarter 2015 compared to $4.1 trillion in gross notional cleared in the fourth quarter 2014.
With the acquisitions and mergers continuing to be a trend in the market Intercontinental Exchange looks to continue with its great growth. Here at Gunderson Capital we believe that ICE will continue to gain market share with its new acquisitions and we believe because of this that Intercontinental Exchange is a great stock to hold on to with strong fundamentals, great forward EPS along with a dividend.
Intercontinental Exchange, has a market cap of 30 billion, making it a Large-Cap stock in the Financial sector. I give it a risk profile of Moderate. The company also has a divided yield of 1.17%.
The stock currently has a forward PE ratio of 17.80, based on 2016 earnings estimates of $14.19 per share. I currently have a five-year target price of $500.00 on Intercontinental Exchange which still represents great upside potential. It currently has a proprietary Value Grade of A.
Intercontinental Exchange has been a proven winner over the past 10, 5, and three years, beating the market handily. Over the past 12 month ICE has given a 19.1% return while the S&P has produced -5.9%
Out of the 4,100+ stocks in the Best Stocks Now universe, Intercontinental Exchange is currently ranked #10 in my Best Stocks Now Database! We are long on Intercontinental Exchange for our Moderate accounts here at Gunderson Capital Management.