Intercontinental Exchange, Inc.ICENYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Sell

Fair Value: $130.13 per share(market-calibrated)

-21.7%

Upside to Fair Value

Current

$166.23

Pure Model

$127.01

Fair Value

$130.13

Bull Case

$158.09

Bear Case

$98.60

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

3.65%

Calibrated Growth

2.79%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $127.01.

What's Driving This Ratingfor ICE

↓

CapEx normalizing toward maintenance

Historical CapEx is 3.48% of revenue (heavy investment phase). Model fades this to 1.50% by Year 10, freeing up ~$350M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 41.62% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects -15.86% revenue growth, fading to 2.50% by Year 10. Revenue reaches $17.7B (vs $12.6B today).

🎯

Market pricing in higher long-term growth

To justify $166.23, the market implies 3.65% perpetual growth — 115bps above the model's 2.50%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 78.05% indicates efficient cash generation. FCF reaches $7.1B by Year 10 (40.33% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.03

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.15%

Cost of Debt

Pre-tax Cost of Debt3.49%

Tax Rate22.78%

After-tax Cost of Debt2.69%

Equity Weight (E/V)82.40%

Debt Weight (D/V)17.60%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (82.40% × 9.15%) + (17.60% × 2.69%)

= 8.01%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$10.6B	$11.9B	$13.7B	$15.8B	$17.7B
EBIT	$4.4B	$5.0B	$5.7B	$6.6B	$7.4B
Tax	$1.0B	$1.1B	$1.3B	$1.5B	$1.7B
NOPAT	$3.4B	$3.8B	$4.4B	$5.1B	$5.7B
+ Depreciation	$1.1B	$1.2B	$1.4B	$1.6B	$1.8B
- Capex	$371M	$364M	$357M	$341M	$265M
- Δ NWC	-$295M	$96M	$172M	$143M	$63M
Free Cash Flow	$4.4B	$4.6B	$5.3B	$6.2B	$7.1B
Discount Factor	0.926	0.794	0.680	0.583	0.463
Present Value	$4.1B	$3.6B	$3.6B	$3.6B	$3.3B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$7.1B

Terminal Growth Rate2.50%

WACC8.01%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$132.4B

PV of Terminal Value$61.3B

Exit Multiple Method

Year 10 EBITDA$9.1B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$109.5B

PV of Terminal Value$50.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$36.0B

PV of Terminal Value$61.3B

Enterprise Value$97.3B

(-) Net Debt$19.4B

Equity Value$77.8B

Shares Outstanding571M

Price per Share$136.30

Exit Multiple Method

PV of Projected FCFs$36.0B

PV of Terminal Value$50.7B

Enterprise Value$86.7B

(-) Net Debt$19.4B

Equity Value$67.2B

Shares Outstanding571M

Price per Share$117.72

Pure Model Fair Value

$127.01

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
6.01%	$167.47	$177.65	$190.73	$208.15	$232.50
7.01%	$139.24	$145.37	$152.86	$162.22	$174.24
8.01%	$118.33	$122.31	$127.01	$132.65	$139.53
9.01%	$101.98	$104.70	$107.84	$111.51	$115.83
10.01%	$88.72	$90.66	$92.86	$95.36	$98.25

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$98.60

-40.7% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.29

Base Case

$127.01

-23.6% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.03

Bull Case

$158.09

-4.9% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.88

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-15.86%

Year 3 Revenue Growth5.80%

Year 5 Revenue Growth9.31%

Year 7 Revenue Growth6.59%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin41.62%

Tax Rate22.78%

Historical Capex / Rev3.48%

Terminal Capex / Rev1.50%

NWC / Revenue14.72%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 12x EV/EBITDA (Financial Services sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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