Is Intercontinental Exchange Stock a Buy?
This year has been rough on the financial stocks. The banks have been beaten up on fears of COVID-19 related write-downs, while the real estate investment trust (REIT) sector has had to contend with struggling tenants who have seen their businesses negatively affected by the pandemic. One of the few financial sectors that has held up reasonably well has been the exchanges, specifically the stock exchanges like Intercontinental Exchange (NYSE: ICE).
Volatility in the stock market has increased daily trading volume and boosted fee income. A timely bet on mortgage refinances seems to be paying off. Is the stock a buy?
The Intercontinental Exchange is known mostly for its ownership of the New York Stock Exchange. However, there is more to the company's business than the NYSE. ICE also manages Euronext, which is the largest stock exchange in Europe, and the New York Board of Trade, a popular commodity exchange. The exchanges generate revenue from trading and clearing fees. This is a business that requires the company to take limited credit risk, which is a huge advantage in the current economic environment. Last year, 43% of Intercontinental Exchange's net revenue came from clearing and trading. The second biggest contributor was data services which come from selling trading data to media aggregators and trading terminals.
Source Fool.com
