ICE

We rate Intercontinental Exchange, Inc. (ICE) as a Reduce with a composite score of 49.4/100 at a current price of $155.27. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in value (81th percentile) and stability (69th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (32th percentile) and momentum (36th percentile) tempers our overall conviction. We assign a Narrow Moat rating (56/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Intercontinental Exchange, Inc. holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 49.4/100 places it at rank #2092 in our full 7,333-stock universe. With a $96.4B market capitalization, Intercontinental Exchange, Inc. operates at meaningful scale within the Finance, Insurance, And Real Estate sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 4%, though momentum at the 36th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 100% (+23.5pp vs sector) narrow to operating margins of 38% (+21.2pp vs sector) and net margins of 25.4%, yielding a gross-to-net conversion rate of 25%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $155.27, Intercontinental Exchange, Inc. appears undervalued relative to its fundamentals. Our value factor score of 81/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 27.5x (a 131% premium to the sector median of 11.9x), EV/EBITDA of 13.8x (at a premium), P/B of 3.0x, P/S of 7.0x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Medium uncertainty rating to Intercontinental Exchange, Inc.. The stock presents a balanced risk profile: significant leverage (372% debt-to-equity) and low beta of 0.45 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (372% debt-to-equity); low beta of 0.45 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 69th percentile and quality factor at the 50th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 100% provide a buffer against cost pressures; above-average stability (69th percentile) suggests predictable business dynamics; large-cap scale ($96.4B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Intercontinental Exchange, Inc.'s capital allocation as Poor. Key concerns include elevated leverage (372% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Intercontinental Exchange, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Intercontinental Exchange, Inc. receives a Reduce rating with a composite score of 49.4/100 (rank #2092 of 7,333). Our quantitative framework assigns a Narrow Moat (56/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 54/100.

Our analysis does not support a constructive view on Intercontinental Exchange, Inc. at this time. The combination of the current quantitative profile, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.