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Nasdaq (NDAQ) Up 0.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Nasdaq (NDAQ - Free Report) . Shares have added about 0.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nasdaq due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nasdaq Beats on Q1 Earnings, Cuts Expense Guidance
Nasdaq reported first-quarter 2019 adjusted earnings per share of $1.22, beating the Zacks Consensus Estimate of $1.17 by 4.3%. The bottom line decreased 1.6% year over year.
The company witnessed growth in non-trading revenues and decline in expenses. Strategic acquisitions contributed to revenues in the quarter.
Performance in Detail
Nasdaq’s revenues of $634 million decreased 4.8% year over year. The downside was primarily due to the impact of the divestitures of Public Relations Solutions and Digital Media Services businesses in 2018 and unfavorable forex. However, organic revenues grew 3%. Cinnober and Quandl acquisitions also contributed to revenues. The top line beat the Zacks Consensus Estimate of $633 million.
Adjusted operating expenses were $322 million in the reported quarter, down 8.8% from the year-ago period owing to the divestment of the Public Relations Solutions and Digital Media Services businesses and a $12-million favorable impact from changes in forex rates.
Operating margin of 49% expanded 200 basis points year over year.
Segment Details
Net revenues at Market Services were down 7% from the year-ago quarter to $233 million. This downside was due to lower revenues from equity derivatives and cash equity trading, fixed income and commodities trading plus clearing and trade management services.
Revenues at Corporate Services declined 1% year over year to $131 million, mainly on the back of a decrease in listings services revenues.
Information Services revenues rose 11% year over year to $193 million. Higher index revenues as well as investment data & analytics revenues drove the upside.
Revenues at Market Technology increased 28% year over year to $76 million, riding on 8% organic growth, driven by increases in software delivery and support revenues, higher software as a service revenues and the acquisition of Cinnober.
Financial Update
Nasdaq had cash and cash equivalents of $539 million as of Mar 31, 2019, down 8% from 2018-end level. As of Mar 31, 2019, long-term debt reduced 21.2% from 2018-end level to $2.3 billion.
Capital Deployment
The board of directors approved a 7% hike in regular quarterly dividend to 47 cents. This was in line with the company’s policy of hiking dividend over the long term as earnings and cash flow increase.
As of Mar 31, 2019, Nasdaq had $332 million remaining under its share repurchase authorization.
Guidance
Nasdaq expects 2019 non-GAAP operating expense in the range of $1.29 to $1.33 billion, down from $1.325 to $1.375 billion guided earlier, to reflect the sale of BWise.
Non-GAAP tax rate is estimated to be in the range of 26% to 27% in 2019 compared with the prior guidance of 25% to 27%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Nasdaq has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Nasdaq has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Nasdaq (NDAQ) Up 0.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Nasdaq (NDAQ - Free Report) . Shares have added about 0.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nasdaq due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nasdaq Beats on Q1 Earnings, Cuts Expense Guidance
Nasdaq reported first-quarter 2019 adjusted earnings per share of $1.22, beating the Zacks Consensus Estimate of $1.17 by 4.3%. The bottom line decreased 1.6% year over year.
The company witnessed growth in non-trading revenues and decline in expenses. Strategic acquisitions contributed to revenues in the quarter.
Performance in Detail
Nasdaq’s revenues of $634 million decreased 4.8% year over year. The downside was primarily due to the impact of the divestitures of Public Relations Solutions and Digital Media Services businesses in 2018 and unfavorable forex. However, organic revenues grew 3%. Cinnober and Quandl acquisitions also contributed to revenues. The top line beat the Zacks Consensus Estimate of $633 million.
Adjusted operating expenses were $322 million in the reported quarter, down 8.8% from the year-ago period owing to the divestment of the Public Relations Solutions and Digital Media Services businesses and a $12-million favorable impact from changes in forex rates.
Operating margin of 49% expanded 200 basis points year over year.
Segment Details
Net revenues at Market Services were down 7% from the year-ago quarter to $233 million. This downside was due to lower revenues from equity derivatives and cash equity trading, fixed income and commodities trading plus clearing and trade management services.
Revenues at Corporate Services declined 1% year over year to $131 million, mainly on the back of a decrease in listings services revenues.
Information Services revenues rose 11% year over year to $193 million. Higher index revenues as well as investment data & analytics revenues drove the upside.
Revenues at Market Technology increased 28% year over year to $76 million, riding on 8% organic growth, driven by increases in software delivery and support revenues, higher software as a service revenues and the acquisition of Cinnober.
Financial Update
Nasdaq had cash and cash equivalents of $539 million as of Mar 31, 2019, down 8% from 2018-end level. As of Mar 31, 2019, long-term debt reduced 21.2% from 2018-end level to $2.3 billion.
Capital Deployment
The board of directors approved a 7% hike in regular quarterly dividend to 47 cents. This was in line with the company’s policy of hiking dividend over the long term as earnings and cash flow increase.
As of Mar 31, 2019, Nasdaq had $332 million remaining under its share repurchase authorization.
Guidance
Nasdaq expects 2019 non-GAAP operating expense in the range of $1.29 to $1.33 billion, down from $1.325 to $1.375 billion guided earlier, to reflect the sale of BWise.
Non-GAAP tax rate is estimated to be in the range of 26% to 27% in 2019 compared with the prior guidance of 25% to 27%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Nasdaq has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Nasdaq has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.