Nasdaq Inc.’s NDAQ accelerating organic growth, focus on ramping up on-trading revenue base, strategic buyouts to capitalize on growing markets opportunities, effective capital deployment along with favorable growth estimates make it worth retaining in one’s portfolio.
NDAQ has a solid track record of beating earnings estimates in the last 13 quarters. It has a VGM Score of B.
Zacks Rank & Price Performance
Nasdaq currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has lost 30.2% compared with the industry’s decrease of 34.8%.
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Optimistic Growth Projections
The Zacks Consensus Estimate for Nasdaq’s 2022 earnings is pegged at $7.94, indicating a 5% increase from the year-ago reported figure on 5.6% higher revenues of $3.6 billion. The consensus estimate for 2023 earnings is pegged at $8.54, indicating a 7.6% increase from the year-ago reported figure on about 6% higher revenues of $3.8 billion.
The long-term earnings growth rate is currently pegged at 9.8%, better than the industry average of 9.1%. It has a Growth Score of B.
Return on Equity (ROE)
Return on equity was 20.1% in the trailing twelve months, better than the industry average of 13.5%.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2022 has moved north by 0.8% while the consensus estimate for 2023 has moved 0.2% in the past 60 days, reflecting analyst optimism.
Nasdaq remains focused on repositioning its business and aims to generate revenues from high growth Market Technology and Investment Intelligence segments. It has diverted R&D spending toward higher-growth products. At the same time, NDAQ has divested non-core assets to intensify its growth focus.
Given vast opportunities in the cryptocurrency markets, Nasdaq has been accelerating its technology expansion. Technology expansion with SMARTS surveillance in non-financial markets is in tandem with this growth strategy.
Nasdaq noted that the anti fin crime space has a total addressable market of $12.5 billion and is expected to witness a CAGR of 17% through 2024. The acquisition of Verafin in February 2021 consolidates Nasdaq's established reg tech leadership to create a global SaaS leader. Nasdaq aims 40-50% Saas revenues as a percentage of total revenues by 2025.
NDAQ estimates growth from its index and analytics businesses, followed by moderate growth in its exchange data products across U.S. and Nordic equities. Nasdaq estimates 5% - 8% revenue organic growth at Investment Intelligence, 8% - 11% at Market Technology and 3% - 5% at Corporate Platforms and 6%-9% growth for the Solutions segment over the medium term.
Nasdaq boasts a healthy balance sheet and cash position along with modest operating cash flow from its diverse business model. This, in turn, helps in effective capital deployment. It had $459 million remaining under its share repurchase authorization as of Mar 31, 2022.
Solid Dividend History
Nasdaq has been hiking dividends at a five-year CAGR (2018-2022) of 9.6%. Its dividend yield is currently 2%, above the industry average of 1.6%.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance sector are RLI Corp. RLI, W.R. Berkley Corporation WRB and HCI Group, Inc. HCI, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
RLI has a solid track record of beating earnings estimates in each of the last seven quarters. In the past year, RLI stock has increased 12.1%.
The Zacks Consensus Estimate for RLI’s 2022 and 2023 earnings per share is pegged at $4.35 and $4.45, indicating year-over-year increases of 12.4% and 2.3%, respectively.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.08%. In the past year, W.R. Berkley's stock has increased 34.7%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 4.9% and 4.1% north, respectively, in the past 30 days.
The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 30 days. In the past year, HCI Group stock has lost 15.7%.
The Zacks Consensus Estimate for 2022 and 2023 earnings per share indicates year-over-year increases of 280.9% and 75%, respectively.
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Nasdaq, Inc. (NDAQ) : Free Stock Analysis Report
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