Intercontinental Exchange (NYSE:ICE) is expected to announce its earnings on Thursday, May 1, 2025. Revenues are anticipated to increase approximately 10% year-over-year to $1.23 billion, while earnings are forecasted to be roughly $0.77 per share, an increase of about $0.14 compared to a year ago. Several trends have been contributing to recent performance, including record activity in futures and options, as well as heightened trading volumes in energy and interest rates. These trends are likely to persist in Q1, with the markets experiencing significant volatility. When ICE disclosed its Q4 earnings in January, it indicated that January trading volumes had already risen 21% year-over-year, with open interest up 11%, suggesting ongoing momentum in its futures and options division.
The company currently has a market capitalization of $94 billion. Revenue for the past twelve months was $12 billion, and it was operationally profitable with $4.4 billion in operating profits and a net income of $2.8 billion. That said, for those seeking greater returns with lower volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative, having outperformed the S&P 500 and yielded returns exceeding 91% since its inception.
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Historical Chances of Positive Post-Earnings Returns for Intercontinental Exchange
Here are some insights on one-day (1D) post-earnings returns:
- There are 20 earnings observations recorded over the last five years, with 8 positive and 12 negative one-day (1D) returns noted. In total, positive 1D returns occurred approximately 40% of the time.
- This percentage rises to 42% if we examine data from the last 3 years instead of 5.
- The median of the 8 positive returns equals 2.6%, while the median of the 12 negative returns is -1.3%
Additional information on observed 5-Day (5D) and 21-Day (21D) returns following earnings is summarized with the statistics in the table below.
Correlation Among 1D, 5D, and 21D Historical Returns
A relatively lower-risk approach (although not beneficial if the correlation is weak) is to analyze the correlation between short-term and medium-term returns after earnings, identify a pair with the highest correlation, and perform the corresponding trade. For instance, if 1D and 5D demonstrate the highest correlation, a trader can adopt a “long” position for the subsequent 5 days if the 1D post-earnings return is positive. Below is some correlation data based on 5-year and more recent 3-year history. Note that the correlation noted as 1D_5D refers to the relationship between 1D post-earnings returns and the following 5D returns.
Is There Any Link with Earnings from Peers?
Occasionally, the performance of peers can affect post-earnings reactions in stocks. Pricing may start to be factored in before the earnings announcement. Here is some historical data comparing the post-earnings performance of Intercontinental Exchange stock to the stock performance of peers that released earnings prior to Intercontinental Exchange. For a fair assessment, peer stock returns also represent post-earnings one-day (1D) returns.
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