Back to top

Analyst Blog

Zacks Equity Research

Can Nasdaq's Prudent Strategic Initiatives Mitigate Risks?

EFX NDAQ MA

Trades from $3

On Oct 3, 2016, we issued an updated research report on Nasdaq, Inc. (NDAQ - Free Report) .

Nasdaq remains committed toward growth through acquisitions and strategic initiatives that enable entry and cross-selling opportunities into new markets via its low-cost and highly-flexible platform. As a result, the securities exchange has been able to expand its portfolio by adding 17 exchange-traded funds (ETF) to its current global index platform.

Further, the securities exchange has a robust balance sheet and cash position. It also generates modest operating cash flow from its diverse business model. A strong balance sheet enables the company to engage in shareholder-friendly moves like dividend hikes and share buybacks.

Moreover, consistent reduction in operating and interest expenses should support the bottom line, improve cash flow and accelerate share buybacks. Management is on track to further reduce the leverage ratio and free up capital for incremental business investments and shareholders’ return.

Nasdaq continues to drive its operating leverage through prudent business management. This, in turn, has enhanced its ability to invest in new business building initiatives and paved the way for healthy organic growth efficiencies in the long run.

However, the securities exchange experienced a rise in expenses owing to the development and diversification of its business. As a result, operating leverage, margins and sustenance are subjected to the risk of escalating expenses.

Moreover, currency fluctuations and pricing are expected to weigh on Nasdaq’s future performance. Also, the Zacks Consensus Estimate witnessed downward revisions, where the same dipped 0.5% for both 2016 and 2017, over the last 60 days.

Currently, Nasdaq carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks from the finance sector include Equifax Inc. (EFX - Free Report) , MasterCard Incorporated (MA - Free Report) and National Interstate Corporation .

National Interstate, a specialty property and casualty insurer, saw the Zacks Consensus Estimate increasing 7.6% and 7.3% for 2016 and 2017, respectively, over the last 60 days. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Equifax, a financial transaction services provider, witnessed the Zacks Consensus Estimate inch up 0.4% and 0.2% for 2016 and 2017, respectively, over the last 60 days. The company holds a Zacks Rank #2 (Buy).

MasterCard, another financial transaction services provider, saw the Zacks Consensus Estimate inch up 0.8% and 0.9% for 2016 and 2017, respectively, over the last 60 days. The insurer has a Zacks Rank #2.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>