ICE Intercontinental Exchange
Superb exchange-and-data moat, but the price already assumes perfection; wait for a better entry.
The story
ICE runs a toll-road franchise: dominant energy futures (Brent, TTF), the NYSE, and a sticky, subscription-heavy data and index business, plus a mortgage technology unit (Black Knight) that is still waiting on a housing recovery. It is a mature compounder. Growth comes from pricing power in data, energy hedging volumes, and optional bets like tokenization and 24/7 trading, not from reinvesting heavily. Leverage from the Black Knight deal is being paid down steadily.
No facts have changed materially, so I kept all the prior drivers. TTM margin of 45.7% is on track toward the 47% target, and TTM revenue growth of about 6% supports 7% in year one. The NYSE/Blockchain.com tokenization news is optionality, not a change to the base case, and the reported 0.28 sales-to-capital reflects acquisition goodwill rather than the true incremental reinvestment need.
Value drivers
| Revenue growth (Y1) | 7.0% |
| Terminal growth | 3.5% |
| Forecast horizon | 8y |
| Target operating margin | 47.0% |
| Years to target margin | 3 |
| Sales-to-capital | 1.50 |
| Beta | 1.05 |
| Failure probability | 0.5% |
| Cost of capital (WACC) | 9.2% |
| Terminal WACC | 9.0% |
Valuation bridge
| PV of explicit FCFF | 30.89B |
| PV of terminal value | 44.40B |
| Equity value | 56.12B |
| ÷ shares → per share | $99.97 |
News
bullish +0.30 · 8 articles
- NYSE, Blockchain Team Up For Round-The-Clock Trading
- Intercontinental Exchange Sees Multiple Growth Opportunities, RBC Says
- MoonPay to Acquire North Capital in $60M Deal to Expand Tokenization
- NYSE Teams Up With Blockchain.com to Offer Tokenized Stocks
- ICE’s New Private Credit Data Platform Might Change The Case For Investing In Intercontinental Exchange (ICE)
- Intercontinental Exchange (ICE) Launches Private Credit Data Service, Is The Stock Still Cheap?
- CME Group Expands Equity Derivatives With New Factor Futures
- Beat the Market Like Zacks: PBF, Palantir, Adobe in Focus
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 14.37B | 7.0% | 46.1% | 5.14B | 626.55M | 4.51B | 4.13B |
| 2 | 15.30B | 6.5% | 46.6% | 5.52B | 622.52M | 4.90B | 4.11B |
| 3 | 16.22B | 6.0% | 47.0% | 5.91B | 611.98M | 5.30B | 4.07B |
| 4 | 17.11B | 5.5% | 47.0% | 6.24B | 594.64M | 5.64B | 3.97B |
| 5 | 17.97B | 5.0% | 47.0% | 6.55B | 570.32M | 5.98B | 3.86B |
| 6 | 18.77B | 4.5% | 47.0% | 6.84B | 538.95M | 6.30B | 3.73B |
| 7 | 19.52B | 4.0% | 47.0% | 7.12B | 500.63M | 6.62B | 3.58B |
| 8 | 20.21B | 3.5% | 47.0% | 7.36B | 455.57M | 6.91B | 3.43B |
Key risks
- Mortgage technology stays weak if rates and origination volumes do not recover
- Regulatory or competitive pressure on data pricing and exchange fees
- Roughly $19B of net debt limits flexibility, and higher rates raise the discount rate
Catalysts
- Energy volatility driving record futures volumes
- Housing and refinancing recovery lifting mortgage technology revenue and margins
- Deleveraging that enables larger buybacks