Intercontinental Exchange (NYSE: ICE) and CME Group (NASDAQ:CME) are both large-cap financials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Dividends

Intercontinental Exchange pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. CME Group pays an annual dividend of $2.64 per share and has a dividend yield of 1.7%. Intercontinental Exchange pays out 29.1% of its earnings in the form of a dividend. CME Group pays out 59.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Intercontinental Exchange has raised its dividend for 3 consecutive years.

Profitability

This table compares Intercontinental Exchange and CME Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Intercontinental Exchange 27.91% 11.01% 2.18%
CME Group 40.94% 7.89% 2.16%

Institutional & Insider Ownership

90.8% of Intercontinental Exchange shares are held by institutional investors. Comparatively, 83.2% of CME Group shares are held by institutional investors. 1.5% of Intercontinental Exchange shares are held by insiders. Comparatively, 0.6% of CME Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Intercontinental Exchange and CME Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Intercontinental Exchange $5.96 billion 6.97 $1.42 billion $2.75 25.80
CME Group $3.60 billion 14.35 $1.53 billion $4.41 34.49

CME Group has lower revenue, but higher earnings than Intercontinental Exchange. Intercontinental Exchange is trading at a lower price-to-earnings ratio than CME Group, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Intercontinental Exchange has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500. Comparatively, CME Group has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Intercontinental Exchange and CME Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Intercontinental Exchange 0 2 6 0 2.75
CME Group 0 3 6 0 2.67

Intercontinental Exchange presently has a consensus price target of $72.38, suggesting a potential upside of 2.01%. CME Group has a consensus price target of $142.71, suggesting a potential downside of 6.18%. Given Intercontinental Exchange’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Intercontinental Exchange is more favorable than CME Group.

Summary

Intercontinental Exchange beats CME Group on 9 of the 16 factors compared between the two stocks.

Intercontinental Exchange Company Profile

Intercontinental Exchange Inc, formerly IntercontinentalExchange Group, Inc., is a network of regulated exchanges and clearing houses for financial and commodity markets. The Company delivers transparent and accessible data, technology and risk management services to markets around the world through its portfolio of exchanges, including the New York Stock Exchange, ICE Futures, Liffe and Euronext. In February 2014, the Company completed the acquisition of Singapore Mercantile Exchange. In July 2014, Intercontinental Exchange Inc sold its Wombat Financial Software, a unit of NYSE Technologies. Effective September 10, 2014, Intercontinental Exchange Inc acquired an undisclosed majority interest in Holland Clearing House NV.

CME Group Company Profile

CME Group Inc., through its exchanges, provides products across all asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The Company’s segment primarily consists of the Chicago Mercantile Exchange Inc. (CME), Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. (NYMEX) and Commodity Exchange, Inc. (COMEX) exchanges. The Company provides electronic trading around the globe on its CME Globex platform. The Company also offers clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives through its clearinghouses CME Clearing and CME Clearing Europe. It also provides hosting, connectivity and customer support for electronic trading through its co-location services. The Company’s CME Direct platform offers side-by-side trading of exchange-listed and privately negotiated markets.

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