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Here's Why Investing in Nasdaq (NDAQ) is a Prudent Move Now
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Nasdaq, Inc. (NDAQ - Free Report) has been in investors’ good books on the back of organic growth, new sales, strong retention, and solid capital position.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $7.34 and $7.61, indicating a year-over-year increase of 18.7% and 3.6%, respectively.
Earnings Surprise History
Nasdaq has a decent earnings surprise history. It beat estimates in each of the last four quarters, with the average being 9.21%.
Zacks Rank & Price Performance
Nasdaq currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 55.6% compared with the industry’s increase of 26.3%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 18.3%, better than the industry average of 12.8%, reflecting the company’s efficiency in utilizing shareholders’ fund.
Business Tailwinds
Organic growth in both Solutions segment businesses and Market Services business is likely to ramp up revenue growth. The Zacks Consensus Estimate for the company’s 2021 and 2022 revenues is pegged at $3.3 billion and $3.5 billion, indicating a year-over-year increase of 16.4% and 4.4%, respectively.
Investment Intelligence is likely to benefit from organic growth in proprietary data products from new sales, higher assets under management (AUM) in exchange-traded products linked to Nasdaq indexes, and increased futures trading linked to the Nasdaq-100 Index as well as growth in eVestment platform driven by new sales, strong retention, and higher average revenue per client from expanded offerings.
Higher revenues at marketplace infrastructure technology as well as anti-financial crime technology are likely to drive the Market Technology segment. Nasdaq estimates 5%-8% organic revenue growth at Investment Intelligence and 8%-11% growth at Market Technology in the medium term.
Nasdaq boasts a healthy balance sheet and cash position along with modest operating cash flow from its diverse business model. Access to a revolving credit facility and commercial paper program is expected to provide enough cash to fund operating expenses, capital expenditures and debt repayments.
Nasdaq has narrowed its 2021 non-GAAP operating expense guidance to a range of $1.59 billion to $1.62 billion, which indicates strong and broad-based organic revenue growth in the first half of 2021. It has impacted variable expenses like performance-based compensations and marketing commitments.
Courtesy of its solid financial strength, Nasdaq engages in capital deployment to enhance shareholder value. The company increased dividend at a five-year CAGR (2014-2021) of 22.6%. It currently yields 1.1%, which is better than the industry average of 1%. Currently, it has $1.46 billion remaining under its share repurchase authorization.
Image: Bigstock
Here's Why Investing in Nasdaq (NDAQ) is a Prudent Move Now
Nasdaq, Inc. (NDAQ - Free Report) has been in investors’ good books on the back of organic growth, new sales, strong retention, and solid capital position.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $7.34 and $7.61, indicating a year-over-year increase of 18.7% and 3.6%, respectively.
Earnings Surprise History
Nasdaq has a decent earnings surprise history. It beat estimates in each of the last four quarters, with the average being 9.21%.
Zacks Rank & Price Performance
Nasdaq currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 55.6% compared with the industry’s increase of 26.3%.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 18.3%, better than the industry average of 12.8%, reflecting the company’s efficiency in utilizing shareholders’ fund.
Business Tailwinds
Organic growth in both Solutions segment businesses and Market Services business is likely to ramp up revenue growth. The Zacks Consensus Estimate for the company’s 2021 and 2022 revenues is pegged at $3.3 billion and $3.5 billion, indicating a year-over-year increase of 16.4% and 4.4%, respectively.
Investment Intelligence is likely to benefit from organic growth in proprietary data products from new sales, higher assets under management (AUM) in exchange-traded products linked to Nasdaq indexes, and increased futures trading linked to the Nasdaq-100 Index as well as growth in eVestment platform driven by new sales, strong retention, and higher average revenue per client from expanded offerings.
Higher revenues at marketplace infrastructure technology as well as anti-financial crime technology are likely to drive the Market Technology segment.
Nasdaq estimates 5%-8% organic revenue growth at Investment Intelligence and 8%-11% growth at Market Technology in the medium term.
Nasdaq boasts a healthy balance sheet and cash position along with modest operating cash flow from its diverse business model. Access to a revolving credit facility and commercial paper program is expected to provide enough cash to fund operating expenses, capital expenditures and debt repayments.
Nasdaq has narrowed its 2021 non-GAAP operating expense guidance to a range of $1.59 billion to $1.62 billion, which indicates strong and broad-based organic revenue growth in the first half of 2021. It has impacted variable expenses like performance-based compensations and marketing commitments.
Courtesy of its solid financial strength, Nasdaq engages in capital deployment to enhance shareholder value. The company increased dividend at a five-year CAGR (2014-2021) of 22.6%. It currently yields 1.1%, which is better than the industry average of 1%. Currently, it has $1.46 billion remaining under its share repurchase authorization.
Other Stocks to Consider
Some other top-ranked stocks from the finance sector are OTC Markets Group Inc. (OTCM - Free Report) , FleetCor Technologies, Inc. and Fiserv, Inc. , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings of OTC Markets surpassed estimates in each of the last four quarters, with the average earnings beat being 35.73%.
FleetCor surpassed estimates in each of the last four quarters, with the average earnings beat being 6.08%.
Earnings of Fiserv surpassed estimates in each of the last four quarters, with the average earnings beat being 3.72%.