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Will Improved Trading Volumes Aid Nasdaq (NDAQ) Q3 Earnings?

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Nasdaq, Inc. (NDAQ - Free Report) is slated to report third-quarter 2018 results on Oct 24 before the market opens. The company boasts a stellar record of delivering positive surprises for four straight quarters with an average beat of 3.45%.

Let’s see, how things are shaping up for this announcement.

Nasdaq is likely to have benefited from improved trading volume, increased subscription and a solid market presence. Strategic acquisitions and divestitures should have aided the company’s performance in the third quarter.

Volumes in the to-be-reported quarter were mixed. While U.S. equity options volume increased 11.8% year over year to 407 million contracts, European options and futures volumes registered 18.1 million contracts, down 5.7% year over year.

Revenues per contract for U.S. equity options improved 7.1% year over year to 15 cents, although the same for European options and futures deceased 5.9% to 48 cents.

Rise in listings should have fueled listing revenues in the third quarter. There were  3,669 listed companies on Nasdaq compared with 3,525 in the year-ago period. Total listings grew 4.4% over the year-earlier quarter’s count to 4,059. The Zacks Consensus Estimate for listing services revenues is pegged at $72 million, up 7.5% year over year.

Higher listing plus Market Technology and Information Services revenues have possibly improved non-transaction revenues. The consensus mark for Marketing information service revenues is pegged at $180 million, up 20% year over year.

Additionally, lower tax incidence owing to tax reform implemented earlier this year, should provide an extra boost to the bottom line.

The Zacks Consensus Estimate for earnings is pegged at $1.14 per share, reflecting a 7.6% rise.

What the Quantitative Model Says

Our proven model does not conclusively show that Nasdaq is likely to beat estimates this reporting cycle. This is because the stock needs to have a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as elaborated below.

Earnings ESP: Nasdaq has an Earnings ESP of -0.13%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Nasdaq, Inc. Price and EPS Surprise

Zacks Rank: Nasdaq carries a Zacks Rank #3, which increases the predictive power of ESP. However, a company needs to have a positive ESP to be confident about a likely earnings surprise. Thus, this combination leaves surprise prediction inconclusive.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks worth considering from the finance sector with the perfect combination of elements to surpass estimates in the next releases are as follows:

Ameriprise Financial, Inc. (AMP - Free Report) is set to report third-quarter earnings on Oct 23. The stock has an Earnings ESP of +4.30% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

CNA Financial Corporation (CNA - Free Report) is set to report third-quarter earnings on Oct 29. This #2 Ranked stock has an Earnings ESP of +4.19%.

Duke Realty Corporation has an Earnings ESP of +2.56%. This Zacks #2 Ranked company is set to report third-quarter earnings on Oct 24.

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