Intercontinental Exchange, Inc. (ICE) stock intrinsic value fair value estimate & owner earnings analysis

Intercontinental Exchange (ICE) runs exchanges and clearing houses (Brent crude and other energy futures, the New York Stock Exchange, cash equities and options), a fixed income and data business, and, since it acquired Black Knight on September 5, 2023 for about $11.8 billion, a U.S. mortgage software and data business. In 2025 revenues after transaction-based costs were $9.9 billion: Exchanges $5.4 billion, Fixed Income and Data Services $2.4 billion and Mortgage Technology $2.1 billion. About half of that is recurring subscription-type revenue ($5.1 billion, up 5% in 2025); the rest is transaction revenue ($4.9 billion, up 10%), which rises and falls with trading volumes. How we measured earnings. We start from operating cash flow, remove swings in working capital (2025 included a $316 million unwind of exchange fees owed to the SEC, which is timing rather than earning power), and deduct stock compensation ($238 million in 2025) and the capital spending needed to keep the business running, including capitalized software. That gives owner earnings per diluted share of $3.03 in 2016 rising to $7.28 in 2025, with $5.66 in 2023, $6.36 in 2024. Depreciation and amortization of $1.56 billion, including $993 million of amortization of acquired intangibles (mostly Black Knight), is already excluded from cash flow, so it is not deducted again. We treated it as a reason to keep growth assumptions modest rather than lowering the earnings level. Cash interest is already inside these figures, and we do not subtract debt again. Starting level. Black Knight only joined mid-2023, so earlier years describe a smaller company. We anchored on the median of 2023 to 2025, $6.36 per share, rather than the 2025 figure of $7.28. 2025 owner earnings grew 14% over 2024, but that includes a year of strong trading volumes and the first full year of Black Knight's contribution to operating income, neither of which we are willing to assume repeats. The base case therefore starts growth at 5%, below the 14% just achieved, in line with the 5% growth of recurring revenue. Base case: $147 per share. Owner earnings start at about $6.35 and grow 5% in the first year, tapering by roughly 0.2 points a year to about 3% in year ten (around $9.49 per share). We credit only the growth that comes from the recurring subscription base and the company's demonstrated record of steady tuck-in acquisitions and network additions; we credit no further improvement in Mortgage Technology margins (its operating income turned from a $170 million loss in 2024 to $14 million profit in 2025, but that is not yet a track record) and no share gains or new products. After year ten we assume earnings hold flat rather than grow, because the exchange and clearing franchises are structural and have persisted, but nothing further is evidenced. Bear case: $90 per share. Trading volumes fall back and Mortgage Technology stays weak, so owner earnings settle near $5.00 per share (roughly the 2022 level, before Black Knight) and grow only 1% a year, then flat. Leverage matters here: total debt is $19.6 billion, interest expense was $803 million in 2025, and $1.0 billion, $2.0 billion and $2.2 billion of notes mature in 2026, 2027 and 2028, so refinancing at higher rates would take a further bite. Bull case: $183 per share. Owner earnings stay at the 2025 level of about $7.28 and grow 7% in year one, tapering to 4%, matching the 7% growth in 2025 revenues after transaction-based costs and the roughly 10% annual growth in owner earnings per share over 2016 to 2025; then flat after year ten (about $11.96 per share). What would make this wrong. A prolonged fall in trading volumes and mortgage activity would hit the transaction half of revenue, and the large debt load raises the cost of a weak year. The analysis is based on the 2025 annual report; we did not incorporate the most recent quarterly results. Because of that transaction and debt sensitivity, the margin-of-safety price is set well below the base value, at $95, close to the bear case.