How Will Intercontinental Exchange (ICE) Stock Respond to SuperDerivatives Deal?

NEW YORK (TheStreet) -- Intercontinental Exchange (ICE) , the network of regulated exchanges and clearing houses for financial and commodity markets, agreed to acquire SuperDerivatives, an Israeli financial technology group, as it seeks to penetrate the lucrative information market, the Financial Times reports.

ICE is expected to pay $350 million in cash for the Tel Aviv based business and a deal could be announced as early as this week, sources told the Times.

SuperDerivatives provides data and analytics on over-the-counter derivatives but also has a chat platform similar to the one used on Bloomberg terminals.

 

ICE has long wanted to crack the market for providing high-tech information terminals and has recently been under growing pressure to do so as Bloomberg and other financial information providers push into its core markets, the Times said.

Shares of Intercontinental Exchange closed at $185.62 yesterday.

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

"We rate INTERCONTINENTAL EXCHANGE (ICE) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, increase in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • ICE's very impressive revenue growth greatly exceeded the industry average of 11.3%. Since the same quarter one year prior, revenues leaped by 172.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Diversified Financial Services industry average. The net income increased by 47.4% when compared to the same quarter one year prior, rising from $153.32 million to $226.00 million.
  • Net operating cash flow has significantly increased by 60.64% to $372.00 million when compared to the same quarter last year. In addition, INTERCONTINENTAL EXCHANGE has also vastly surpassed the industry average cash flow growth rate of 0.71%.
  • Although ICE's debt-to-equity ratio of 0.30 is very low, it is currently higher than that of the industry average. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.06 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • You can view the full analysis from the report here: ICE Ratings Report
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