Intercontinental Exchange (ICE) Stock Gained on Trayport Acquisition

Intercontinental Exchange (ICE) stock closed higher on Monday, as it will acquire commodities trading platform Trayport for $650 million in stock.
By Rachel Graf ,

NEW YORK (TheStreet) -- Intercontinental Exchange (ICE) - Get Report  stock closed up by 1.40% to $262.10 on Monday afternoon, after the company announced it has agreed to acquire commodities trading platform Trayport from BGC Partners (BGCP) and GFI Group (GFIG) for $650 million in stock.

The Intercontinental Exchange owns the New York Stock Exchange. 

Under the terms of the transaction, GFI Group will receive 2.5 million shares of the Intercontinental Exchange. 

The deal will help the Intercontinental Exchange provide new services to European over-the-counter energy markets such as power, natural gas and coal, according to a statement.

The agreement was unanimously approved by the boards of both companies, and is expected to close in the fiscal 2016 first quarter.

"Consistent with our track record of bringing improvements to markets, we will invest in and enhance the Trayport offering based on evolving customer needs," CEO Jeffrey Sprecher said in a statement.

Separately, TheStreet Ratings team rates INTERCONTINENTAL EXCHANGE as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

We rate INTERCONTINENTAL EXCHANGE (ICE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, revenue growth, reasonable valuation levels and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • INTERCONTINENTAL EXCHANGE has improved earnings per share by 46.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, INTERCONTINENTAL EXCHANGE increased its bottom line by earning $8.45 versus $4.03 in the prior year. This year, the market expects an improvement in earnings ($11.83 versus $8.45).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 15.2%. Since the same quarter one year prior, revenues rose by 14.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $120.00 million or 46.34% when compared to the same quarter last year. In addition, INTERCONTINENTAL EXCHANGE has also vastly surpassed the industry average cash flow growth rate of -17.14%.
  • You can view the full analysis from the report here: ICE

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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