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Nasdaq (NDAQ) Down 15.6% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Nasdaq (NDAQ - Free Report) . Shares have lost about 15.6% 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 its most recent earnings report in order to get a better handle on the important drivers.

Nasdaq Beats on Q1 Earnings, Tweaks Expense View

Nasdaq reported first-quarter 2022 adjusted earnings per share of $1.97, beating the Zacks Consensus Estimate of $1.93 by 2.1%. The bottom line improved 0.5% year over year.The improvement was mainly driven by solid results at the Solutions segment.

Performance in Detail

Nasdaq’s revenues of $892 million increased 5% year over year. The upside can primarily be attributed to a $51 million impact from organic growth and a $4 million increase from the net impact of acquisitions and divestitures. It was partially offset by a $14 million decrease from the impact of changes in FX rates. The top line matched the Zacks Consensus Estimate.

Net revenues at Market Services were down 6% from the year-ago quarter to $315 million, the second-highest quarterly revenues. This downside was largely owing to a 4% organic decline and a $6 million decrease from the impact of changes in the FX rate.

Revenues at the Solutions segments increased 15% year over year to $576 million, driven by a 13% positive impact from organic growth and a 4% increase from the inclusion of revenues from the acquisition of Verafin, partially offset by an $8 million decrease from the impact of changes in FX rates.

Adjusted operating expenses were $428 million, up 9% from the year-ago period. The increase was due to an organic increase of 9% from the prior-year period and a 2% increase from the net impact of acquisitions and divestitures. It was partially offset by a $10 million decrease from changes in FX rates.

The operating margin of 51% contracted 200 basis points year over year.

The Nasdaq stock market welcomed 110 new company listings in the first quarter of 2022, including 70 IPOs. The number of listed companies was 4,242 at quarter end.

Financial Update

Nasdaq had cash and cash equivalents of $486 million as of Mar 31, 2022, up 3.7% from the 2021-end level. Long-term debt decreased 0.2% from the 2021-end level to $4.8 billion as of Dec 31, 2021.

Capital Deployment

Nasdaq returned $556 million to shareholders in the reported quarter, including $467 million in share repurchases and $89 million in dividends.

The board of directors approved an 11% hike in its dividend to 60 cents per share. The dividend will be paid out on Jun 24, 2022 to shareholders of record at the close of Jun 10, 2022.

As of Mar 31, 2022, $459 million remained under the board authorized share repurchase program.

Nasdaq targets a 3-for-1 stock split in the form of a stock dividend and thus is in the process of seeking approval from shareholders and the SEC.

Guidance

Nasdaq expects 2022 non-GAAP operating expenses in the range of $1.70 billion to $1.76 billion, narrowed from the prior expectation of $1.68 billion to $1.76 billion.

Nasdaq forecasts non-GAAP tax rate in the range of 24% to 26% in 2022.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Nasdaq has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front 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 C. 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 has been net zero. Notably, 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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