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Will Nasdaq (NDAQ) Pull a Surprise this Earnings Season?
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Nasdaq, Inc. (NDAQ - Free Report) is slated to report third-quarter 2016 results on Oct 26, before the market opens. Last quarter, the company posted a positive earnings surprise of 3.41%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Nasdaq is likely to register an increase in expenses owing to the development and diversification of its business. This, in turn, might adversely affect its operating leverage and margins in the to-be-reported quarter.
In addition, currency fluctuations and pricing are likely to weigh on Nasdaq’s performance in the third quarter.
Further, the securities exchange might experience a decline in overall trading volumes, primarily due to restrictions on high frequency trading and taxes on securities transactions.
However, Nasdaq is likely to witness top-line growth in the to-be-reported quarter. We expect various robust operational activities, strong listings, and prudent business management to boost revenues.
Moreover, the securities exchange is likely to report organic growth in Technology Solutions segment, mainly due to continued growth in Market Technology. In addition, the company is likely to experience growth in its Listing Services and Corporate Solutions segments in the third quarter, mainly due to strategic initiatives.
With respect to the surprise trend, the company delivered positive surprises in three of the last four quarters, with an average beat of 2.00%.
Our proven model does not conclusively show that Nasdaq is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Nasdaq has an Earnings ESP of -1.10%. This is because the Most Accurate estimate is pegged at 90 cents, while the Zacks Consensus Estimate stands at 91 cents.
Zacks Rank: Nasdaq carries a Zacks Rank #3. Though the company has a favorable Zacks Rank, its negative ESP complicates surprise prediction.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the finance sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
RenaissanceRe Holdings Ltd. (RNR - Free Report) has an Earnings ESP of +3.59% and a Zacks Rank #3. The company is set to report third-quarter earnings on Nov 1.
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +1.61% and a Zacks Rank #3. The company is slated to report third-quarter earnings on Nov 2.
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Will Nasdaq (NDAQ) Pull a Surprise this Earnings Season?
Nasdaq, Inc. (NDAQ - Free Report) is slated to report third-quarter 2016 results on Oct 26, before the market opens. Last quarter, the company posted a positive earnings surprise of 3.41%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Nasdaq is likely to register an increase in expenses owing to the development and diversification of its business. This, in turn, might adversely affect its operating leverage and margins in the to-be-reported quarter.
In addition, currency fluctuations and pricing are likely to weigh on Nasdaq’s performance in the third quarter.
Further, the securities exchange might experience a decline in overall trading volumes, primarily due to restrictions on high frequency trading and taxes on securities transactions.
However, Nasdaq is likely to witness top-line growth in the to-be-reported quarter. We expect various robust operational activities, strong listings, and prudent business management to boost revenues.
Moreover, the securities exchange is likely to report organic growth in Technology Solutions segment, mainly due to continued growth in Market Technology. In addition, the company is likely to experience growth in its Listing Services and Corporate Solutions segments in the third quarter, mainly due to strategic initiatives.
With respect to the surprise trend, the company delivered positive surprises in three of the last four quarters, with an average beat of 2.00%.
NASDAQ INC Price and EPS Surprise
NASDAQ INC Price and EPS Surprise | NASDAQ INC Quote
Earnings Whispers
Our proven model does not conclusively show that Nasdaq is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Nasdaq has an Earnings ESP of -1.10%. This is because the Most Accurate estimate is pegged at 90 cents, while the Zacks Consensus Estimate stands at 91 cents.
Zacks Rank: Nasdaq carries a Zacks Rank #3. Though the company has a favorable Zacks Rank, its negative ESP complicates surprise prediction.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the finance sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
CNA Financial Corporation (CNA - Free Report) , which is slated to report third-quarter earnings on Oct 31, has an Earnings ESP of +2.38% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
RenaissanceRe Holdings Ltd. (RNR - Free Report) has an Earnings ESP of +3.59% and a Zacks Rank #3. The company is set to report third-quarter earnings on Nov 1.
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +1.61% and a Zacks Rank #3. The company is slated to report third-quarter earnings on Nov 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>>