Nasdaq, Inc (NDAQ - Free Report) is poised for long-term growth on the back of its focus on Market Technology and Information Services businesses, ramping up non-transaction revenue base, acquisitions and strong capital position. The Zacks Consensus Estimate for earnings of this provider of trading and clearing across various asset classes is pegged at $4.77 on $2.6 billion revenues for 2019.
Nasdaq’s focus on boosting its non-transaction revenue base should continue to support organic growth. Management expects non-transaction revenues to grow 8-11% over the medium term.
The company expects growth from its index and analytics businesses, followed by moderate growth in its exchange data products across U.S. and Nordic equities, options and fixed income businesses ramping up its growth profile.
The company is also focusing more on Market Technology and Information Services businesses, offering the biggest growth opportunities per the company’s developmental strategies.
Nasdaq’s diverse business model has been helping it maintain a healthy balance sheet and cash level. This helps the company to have a strong capital management policy in place. Its dividend has increased at a four-year CAGR of 35.6%. Nasdaq’s dividend currently yields 2.2%, better than the industry average of 1.5%. Apart from increasing dividend and engaging in buybacks, the company engages in de-leveraging, investing in organic growth initiatives, and pursuing strategic acquisitions.
Given a solid capital position, the company has been pursuing initiatives to ramp up growth. Its inorganic story remains impressive and will help the company expand geographically and add capabilities. The recent acquisition of Quandl, Inc. will help Nasdaq expand technology and analytics offerings.
Valuation looks attractive at current level, as the price-to-book multiple of 2.4 is lower than the industry’s average of 2.9. Undervalued shares with solid fundamentals offer best investment opportunities.
Shares of this Zacks Rank #2 (Buy) company have gained 4.8% year to date. Though it underperformed the industry’s 15.8% growth, the stock fared better than the Zacks S&P 500 composite’s decline of 6.9%.
Nasdaq has a stellar track of beating earnings expectations for eight straight quarters. The company’s expected long-term earnings growth is pegged at 9.6%, better than the industry average of 9.4%.
Other Stocks to Consider
Investors interested in the Securities and Exchanges industry can look at CME Group Inc. (CME - Free Report) , Cboe Global Markets, Inc.(CBOE - Free Report) and Intercontinental Exchange Inc. (ICE - Free Report) . Each stock carries Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CME Group operates contract markets for the trading of futures and options on futures contracts worldwide. The company delivered a 2.11% positive surprise in the last reported quarter.
Cboe Global operates as an options exchange in the United States. The company delivered a 4.95% positive surprise in the last reported quarter.
Intercontinental Exchange operates regulated exchanges, clearing houses, and listings venues for financial and commodity markets. It came up with a 6.25% positive surprise in the last reported quarter.
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