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What's in Store for Nasdaq (NDAQ) This Earnings Season?

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Nasdaq, Inc. (NDAQ - Free Report) is slated to report second-quarter 2020 results on Jul 22, before market open. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 3.4%, led by growth in non-trading revenues.

Let’s see what’s in store for the company this time around.

Nasdaq’s second-quarter performance is likely to have benefited from growth of Investment Data & Analytics business, higher listing business and lower interest expenses.

Nasdaq’s second-quarter results are also expected to reflect growth in eVestment.

Non-trading revenues are expected to have benefited from better performance of Market Technology, and continued strong growth of Index and Investment Data & Analytics businesses.

Market Technology and Information Services businesses provide the biggest growth opportunities. Revenues in this segment are likely to have benefited from organic growth, increase in software delivery and support projects and SaaS surveillance revenues.

In the second quarter, the majority of the revenues in the Information Services segment came from index licensing and investment analytics products, owing to years of investment into expanding the capabilities in these higher growth areas.

The Zacks Consensus Estimate for Marketing Information Service revenues is pegged at $82 million, indicating an increase of 3.8% from the year-ago reported figure.

Nasdaq reported mixed volumes for second-quarter 2020. While U.S. equity options volume increased 45.7% year over year to 612 million contracts, European options and futures volume declined 22.5% year over year to 17.6 million contracts.

Though revenues per contract for U.S. equity options deceased 20% to 12 cents, the same for European options and futures increased 10% to 44 cents. In Cash Equities, Nasdaq’s U.S. matched equity volume in the second quarter grossed 142.6 billion shares, up 62.7% from the prior-year quarter. European equity volume improved nearly 33.9% year over year to $253 billion.

Under Fixed Income and Commodities, U.S. Fixed income volume in second quarter declined 57.3% to $1.2 trillion. European fixed income volume decreased 5.3% to 7.1 million contracts.

Higher listings are expected to have aided revenues. In the second quarter, there were 3,788 listed companies on Nasdaq compared with 3,735 in the year-ago period. Total listings grew 2.2% year over year to 4,198. The Zacks Consensus Estimate for listing services revenues is pegged at $76 million, indicating 2.7% increase from the year-ago period reported figure.

Interest expenses are likely to have decreased due to refinancing of senior notes in May 2019 with the 2029 Notes at a lower interest rate as well as the repayment of senior unsecured floating rate notes in March 2019 with commercial paper issuances and cash on hand.

The Zacks Consensus Estimate for earnings is pegged at $1.45, indicating 18.8% increase from the year-ago period reported figure.

Earnings Surprise History

The company boasts an attractive earnings surprise history, having surpassed estimates in each of the trailing four quarters, the surprise being 3.13%, on average. This is depicted in the chart below:

Nasdaq, Inc. Price and EPS Surprise

What Our Quantitative Model States

Our proven model does not predict an earnings beat for Nasdaq this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Nasdaq has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.45. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Nasdaq carries a Zacks Rank #3.

Stocks to Consider

Here are some stocks from the finance sector with the perfect combination of elements to surpass estimates in their upcoming releases.

Cboe Global Markets (CBOE - Free Report) has an Earnings ESP of +0.48% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Atlantic Capital Bancshares, Inc (ACBI - Free Report) has an Earnings ESP of +33.33% and a Zacks Rank #3.

Ares Commercial Real Estate Corporation (ACRE - Free Report) has an Earnings ESP of +19.15% and a Zacks Rank of 1.

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