Intercontinental Exchange Inc. ICE recently announced its decision to go for a five-for-one stock split of common stock in the form of a stock dividend. Shareholders on record as of Oct 27, 2016 will get four additional shares for each share held. The new shares will be payable on Nov 3, 2016. The company’s common stock is expected to begin trading on a split-adjusted basis from Nov 4, 2016. Shares gained about 0.75% in the trading session on Oct 12, to finally close at $267.33.
The shares of Intercontinental Exchange have been consistently trading above $200 since Nov 7, 2013. Year-to-date, the stock has returned 4.32%. Notably, the share price will be slashed by one-fifth post spilt, thereby making it an attractive pick for potential investors.
Stock split increases the number of outstanding shares of a company without changing the company’s market capitalization. A higher number of shares outstanding translates to lower stock price, thus making it affordable for shareholders. Strong fundamentals coupled with favorable industry trends makes shares dearer as they trade at a premium. Following a stock split, value of the same shares fall, in turn, increasing a stock's liquidity.
Intercontinental Exchange continues to drive organic growth with 11 exchanges and seven clearing houses, covering nine asset classes. It is the first exchange to offer clearing in the over-the-counter energy and credit markets and accounts for more than one-third of the global cash trading. Intercontinental Exchange has demonstrated immense growth potential in its futures and OTC markets. The acquisition of NYSE in Nov 2013 solidified Intercontinental Exchange’s position as a premier stock trading platform as it became the second-largest global exchange group with over 60% accretion in market capitalization. The securities exchange also witnessed organic growth on the back of a strong portfolio of future and options’ contracts. Since its IPO in Nov 2005, Intercontinental Exchange has grown its bottom line by 5x and share price by 10x.
The securities exchange in scheduled to report its third-quarter results on Nov 1, before the market opens. Our proven model does not conclusively show that Intercontinental Exchange will beat the Zacks Consensus Estimate. This is because Earnings ESP of -0.31% and a Zacks Rank #4 (Sell) complicates surprise prediction. However, with respect to surprise trend, the company delivered positive surprise in the last three quarters with an average beat of 3.5%.
Stocks to Consider
Some better-ranked stocks from the insurance industry include Everest Re Group Ltd. RE, NMIH Holdings, Inc. NMIH and Universal American Corp UAM. Each of these stocks holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Everest Re Group, a writer of property and casualty (P&C), reinsurance and insurance in the U.S, Bermuda and international markets has returned 4.76% year to date.
NMIH Holdings, a provider of private mortgage guaranty insurance services in the United States, has returned has returned 19.78% year to date.
Universal American Corp, a provider of health insurance and managed care products and services to Medicare and Medicaid customers in the United States has returned 7.86% year to date.
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