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NDAQ Outperforms Industry, Trades at a Discount: How to Play the Stock
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Key Takeaways
Nasdaq shares have gained 19.5% in the past year compared with the industry's growth of 6%.
For 2025, NDAQ expects Capital Access Platforms revenue growth in the range of 5% to 8% over the medium term.
Nasdaq aims to reach 40-50% SaaS revenues as a percentage of total revenues by 2025.
Shares of Nasdaq, Inc. (NDAQ - Free Report) have gained 19.5% in the past year, outperforming the industry's growth of 6%, the Finance sector’s return of 17.2% and the Zacks S&P 500 composite’s appreciation of 17.5%.
With a market capitalization of $49.76 billion, the average volume of shares traded in the last three months was 3.5 million. NDAQ has a solid track record of beating earnings estimates in each of the last four quarters, with an average of 4.36%.
Image Source: Zacks Investment Research
NDAQ Shares are Undervalued
Nasdaq shares are trading at a discount to the Zacks Securities and Exchange industry. Its forward price-to-earnings of 24.13X is lower than the industry average of 24.19X.
Shares of Intercontinental Exchange Inc. (ICE - Free Report) and CME Group Inc. (CME - Free Report) are also trading at a discount to the industry average, while Cboe Global Markets (CBOE - Free Report) shares are trading at a multiple higher than the industry average.
Image Source: Zacks Investment Research
NDAQ’s Growth Projection Encourages
The Zacks Consensus Estimate for Nasdaq’s 2025 earnings per share indicates a year-over-year increase of 17.7%. The consensus estimate for revenues is pegged at $5.14 billion, implying a year-over-year improvement of 10.5%.
The consensus estimate for 2026 earnings per share and revenues indicates an increase of 11.4% and 7.2%, respectively, from the corresponding 2025 estimates.
The long-term earnings growth is expected to be 13.8%, better than the industry average of 10.4%.
Optimist Analyst Sentiment on NDAQ
Four of the 12 analysts covering the stock have raised estimates for 2025, and three analysts have raised the same for 2026 over the past 60 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved up 1.2% and 0.5%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
Nasdaq’s Favorable Return on Capital
Return on equity in the trailing 12 months was 15.9%, better than the industry average of 14.5%. This highlights the company’s efficiency in utilizing shareholders’ funds.
Also, the return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting NDAQ’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 7.1%, better than the industry average of 6%.
What's Aiding NDAQ's Performance?
Nasdaq’s growth strategy focuses on generating more revenues from high-growth Market Technology and Investment Intelligence segments, forward R&D spending on higher-growth products, expansion of its Anti-Financial Crime clientele and innovations.
The company expects strong growth from its index and analytics businesses and moderate growth in its exchange data products across U.S. and Nordic equities. For 2025, Nasdaq continues to expect Capital Access Platforms to deliver revenue growth within its medium-term growth outlook range of 5% to 8% with subdivision revenue growth expected to be consistent with prior comments provided in January and Financial Technology to deliver revenue growth within its medium-term growth outlook range of 10-14% and total Solutions revenue growth of 8% to 11% over the medium term.
NDAQ has an impressive inorganic story, providing it with direct access to the Canadian equities market, expanding its technology offerings, and enhancing its market surveillance techniques.
Nasdaq noted that the anti-fin crime space has a total addressable market of $12.5 billion. Nasdaq aims to achieve 40-50% SaaS revenues as a percentage of total revenues this year.
Conclusion
Nasdaq is set to grow on impressive organic growth, an increasing on-trading revenue base and strategic buyouts to capitalize on market opportunities. Nasdaq is investing in proprietary data, migrating markets and SaaS solutions to capitalize on the growth opportunities in the cryptocurrency markets.
NDAQ’s dividend story is impressive. It has steadily increased its dividend each year and will continue to do so to achieve a dividend payout ratio of 35-38% by 2027.
Coupled with the positive analyst sentiment, solid growth projections, as well as Higher return on capital, the time appears right for potential investors to bet on this Zacks Rank #2 (Buy) insurer. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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NDAQ Outperforms Industry, Trades at a Discount: How to Play the Stock
Key Takeaways
Shares of Nasdaq, Inc. (NDAQ - Free Report) have gained 19.5% in the past year, outperforming the industry's growth of 6%, the Finance sector’s return of 17.2% and the Zacks S&P 500 composite’s appreciation of 17.5%.
With a market capitalization of $49.76 billion, the average volume of shares traded in the last three months was 3.5 million. NDAQ has a solid track record of beating earnings estimates in each of the last four quarters, with an average of 4.36%.
Image Source: Zacks Investment Research
NDAQ Shares are Undervalued
Nasdaq shares are trading at a discount to the Zacks Securities and Exchange industry. Its forward price-to-earnings of 24.13X is lower than the industry average of 24.19X.
Shares of Intercontinental Exchange Inc. (ICE - Free Report) and CME Group Inc. (CME - Free Report) are also trading at a discount to the industry average, while Cboe Global Markets (CBOE - Free Report) shares are trading at a multiple higher than the industry average.
Image Source: Zacks Investment Research
NDAQ’s Growth Projection Encourages
The Zacks Consensus Estimate for Nasdaq’s 2025 earnings per share indicates a year-over-year increase of 17.7%. The consensus estimate for revenues is pegged at $5.14 billion, implying a year-over-year improvement of 10.5%.
The consensus estimate for 2026 earnings per share and revenues indicates an increase of 11.4% and 7.2%, respectively, from the corresponding 2025 estimates.
The long-term earnings growth is expected to be 13.8%, better than the industry average of 10.4%.
Optimist Analyst Sentiment on NDAQ
Four of the 12 analysts covering the stock have raised estimates for 2025, and three analysts have raised the same for 2026 over the past 60 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved up 1.2% and 0.5%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
Nasdaq’s Favorable Return on Capital
Return on equity in the trailing 12 months was 15.9%, better than the industry average of 14.5%. This highlights the company’s efficiency in utilizing shareholders’ funds.
Also, the return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting NDAQ’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 7.1%, better than the industry average of 6%.
What's Aiding NDAQ's Performance?
Nasdaq’s growth strategy focuses on generating more revenues from high-growth Market Technology and Investment Intelligence segments, forward R&D spending on higher-growth products, expansion of its Anti-Financial Crime clientele and innovations.
The company expects strong growth from its index and analytics businesses and moderate growth in its exchange data products across U.S. and Nordic equities. For 2025, Nasdaq continues to expect Capital Access Platforms to deliver revenue growth within its medium-term growth outlook range of 5% to 8% with subdivision revenue growth expected to be consistent with prior comments provided in January and Financial Technology to deliver revenue growth within its medium-term growth outlook range of 10-14% and total Solutions revenue growth of 8% to 11% over the medium term.
NDAQ has an impressive inorganic story, providing it with direct access to the Canadian equities market, expanding its technology offerings, and enhancing its market surveillance techniques.
Nasdaq noted that the anti-fin crime space has a total addressable market of $12.5 billion. Nasdaq aims to achieve 40-50% SaaS revenues as a percentage of total revenues this year.
Conclusion
Nasdaq is set to grow on impressive organic growth, an increasing on-trading revenue base and strategic buyouts to capitalize on market opportunities. Nasdaq is investing in proprietary data, migrating markets and SaaS solutions to capitalize on the growth opportunities in the cryptocurrency markets.
NDAQ’s dividend story is impressive. It has steadily increased its dividend each year and will continue to do so to achieve a dividend payout ratio of 35-38% by 2027.
Coupled with the positive analyst sentiment, solid growth projections, as well as Higher return on capital, the time appears right for potential investors to bet on this Zacks Rank #2 (Buy) insurer. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.