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Why Is Nasdaq (NDAQ) Down 0.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Nasdaq (NDAQ - Free Report) . Shares have lost about 0.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nasdaq due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Nasdaq Beats on Q2 Earnings, Revises Expense Guidance
Nasdaq reported second-quarter 2018 adjusted earnings per share of $1.18, beating the Zacks Consensus Estimate of $1.17. The bottom line also improved 17% year over year.
Improved revenues and higher volumes aided this upside. The company witnessed revenue improvement across all its segments.
Performance in Detail
Nasdaq’s revenues of $615 million improved 3% year over year, driven by 7% organic revenue growth and a 1% positive impact from changes in forex, partially offset by a 5% revenue reduction due to the net impact of divestiture and acquisition of businesses. The top line lagged the Zacks Consensus Estimate of $621 million.
Adjusted operating expenses were $325 million in the reported quarter, up 5% from the year-ago period. This includes a $20 million increase from acquisitions, a $16-million organic expense rise and a $4-million unfavorable impact from the changes in foreign exchange rates.
Operating margin contracted 100 bps year over year to 47%.
Nasdaq projects 2018 non-GAAP operating expense in the range of $1.310-$1.335 billion, lifting the lower end of the earlier guided range of $1.295-$1.335 billion, which in turn, reflects strong organic growth.
The Nasdaq Stock Market welcomed 89 new listings, 56 of which, were IPOs.
Segment-wise, net revenues at Market Services increased 7% from the year-ago quarter to $237 million. This upside was driven by improved revenues from equity derivatives, cash equity trading, fixed income and commodities trading plus clearing and trade management services.
Revenues at Corporate Services grew 7% year over year to $131 million, mainly owing to a rise in Corporate Solutions revenues and Listings Services revenues.
Information Services revenues rose 22% year over year to $175 million. Higher revenues at Data Products as well as Index Licensing and Services drove this uptick.
Revenues at Market Technology improved 14% year over year to $66 million on the back of organic growth in delivery and support revenues as well as higher software service revenues. Market Technology order intake totaled $64 million.
Financial Update
Nasdaq had cash and cash equivalents of $322 million as of Jun 30, 2018, down 14.6% from 2017-end level. As of Jun 30, 2018, long-term debt decreased 17.4% over 2017-end level to $3.1 billion.
Share Repurchase Update
During the quarter under review, the company bought back shares worth $241 million. As of Jun 30, 2018, the company had $386 million shares remaining under its repurchase authorization.
Business Highlights
On Apr 16, 2018, Nasdaq closed the sale of its Public Relations Solutions and Digital Media Services businesses to West Corporation.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Nasdaq has a subpar Growth Score of D, however its momentum is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Nasdaq has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Nasdaq (NDAQ) Down 0.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Nasdaq (NDAQ - Free Report) . Shares have lost about 0.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nasdaq due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Nasdaq Beats on Q2 Earnings, Revises Expense Guidance
Nasdaq reported second-quarter 2018 adjusted earnings per share of $1.18, beating the Zacks Consensus Estimate of $1.17. The bottom line also improved 17% year over year.
Improved revenues and higher volumes aided this upside. The company witnessed revenue improvement across all its segments.
Performance in Detail
Nasdaq’s revenues of $615 million improved 3% year over year, driven by 7% organic revenue growth and a 1% positive impact from changes in forex, partially offset by a 5% revenue reduction due to the net impact of divestiture and acquisition of businesses. The top line lagged the Zacks Consensus Estimate of $621 million.
Adjusted operating expenses were $325 million in the reported quarter, up 5% from the year-ago period. This includes a $20 million increase from acquisitions, a $16-million organic expense rise and a $4-million unfavorable impact from the changes in foreign exchange rates.
Operating margin contracted 100 bps year over year to 47%.
Nasdaq projects 2018 non-GAAP operating expense in the range of $1.310-$1.335 billion, lifting the lower end of the earlier guided range of $1.295-$1.335 billion, which in turn, reflects strong organic growth.
The Nasdaq Stock Market welcomed 89 new listings, 56 of which, were IPOs.
Segment-wise, net revenues at Market Services increased 7% from the year-ago quarter to $237 million. This upside was driven by improved revenues from equity derivatives, cash equity trading, fixed income and commodities trading plus clearing and trade management services.
Revenues at Corporate Services grew 7% year over year to $131 million, mainly owing to a rise in Corporate Solutions revenues and Listings Services revenues.
Information Services revenues rose 22% year over year to $175 million. Higher revenues at Data Products as well as Index Licensing and Services drove this uptick.
Revenues at Market Technology improved 14% year over year to $66 million on the back of organic growth in delivery and support revenues as well as higher software service revenues. Market Technology order intake totaled $64 million.
Financial Update
Nasdaq had cash and cash equivalents of $322 million as of Jun 30, 2018, down 14.6% from 2017-end level. As of Jun 30, 2018, long-term debt decreased 17.4% over 2017-end level to $3.1 billion.
Share Repurchase Update
During the quarter under review, the company bought back shares worth $241 million. As of Jun 30, 2018, the company had $386 million shares remaining under its repurchase authorization.
Business Highlights
On Apr 16, 2018, Nasdaq closed the sale of its Public Relations Solutions and Digital Media Services businesses to West Corporation.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Nasdaq has a subpar Growth Score of D, however its momentum is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Nasdaq has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.