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Here's Why Hold is an Apt Strategy for Nasdaq (NDAQ) Stock
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Nasdaq Inc.’s (NDAQ - Free Report) improving organic growth, focus on ramping up the on-trading revenue base, buyouts to capitalize on growing market opportunities, effective capital deployment along with favorable growth estimates make it worth retaining in one’s portfolio.
NDAQ has a decent track record of beating earnings estimates in three of the last four quarters, the average being 4.40%. Earnings in the last five years grew 13.6%, better than the industry average of 10.5%.
Zacks Rank & Price Performance
Nasdaq currently carries a Zacks Rank #3 (Hold). In a year, the stock has gained 2.5% against the industry’s decrease of 6.2%.
Image Source: Zacks Investment Research
Northbound Estimate Revision
The Zacks Consensus Estimate for Nasdaq’s 2023 earnings has moved up by 2 cents, while the same for 2024 has moved north by 1 cent in the past 30 days, reflecting analysts’ optimism.
Optimistic Growth Projections
The Zacks Consensus Estimate for Nasdaq’s 2023 earnings is pegged at $2.71 per share, indicating a 1.9% increase from the year-ago reported figure on 3.6% higher revenues of $3.7 billion. The consensus estimate for 2024 earnings is pegged at $2.88, indicating a 6.2% increase from the year-ago reported figure on 5.2% higher revenues of $3.9 billion.
The expected long-term earnings growth rate is currently pegged at 4.4%. It carries a Growth Score of B.
Return on Equity
Return on equity was 22.2% in the trailing 12 months, better than the industry average of 10.8%.
Growth Drivers
Nasdaq’s focus on generating more revenues from high-growth Market Technology and Investment Intelligence segments and diverting R&D spending toward higher-growth products bodes well for growth. NDAQ targets 5-7% long-term growth from a non-trading revenue base.
To capitalize on the opportunities in cryptocurrency markets, Nasdaq has been accelerating its technology expansion. Its SMARTS surveillance in non-financial markets is in tandem with this growth strategy. Adena Friedman, chair & CEO of Nasdaq, stated that in recent times there has been a radical change in technological innovation in artificial intelligence. Thus, NDAQ has been making investments in proprietary data, and migrating markets and SaaS solutions to the cloud to reap benefits.
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 consolidated 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 in Investment Intelligence, 13%-16% in Market Technology and 3%-5% in Corporate Platform segments over the medium term.
Nasdaq has a healthy balance sheet and cash position along with modest operating cash flow from its diverse business model. This in turn should continue to support effective capital deployment.
Nasdaq has been hiking dividends at a nine-year CAGR (2018-2023) of 6%. It had $491 million remaining under authorization as of Mar 31, 2023.
However, due to a change in corporate structure, NDAQ expects to incur $115 million to $145 million in pretax charges, of which about 40% will be non-cash charges. Nonetheless, this will help unlock revenue synergies. Nasdaq estimates benefits in the form of combined annual run rate operating efficiencies and revenue synergies of at least $30 million by 2025.
The Zacks Consensus Estimate for CME’s 2023 and 2024 earnings per share indicates a year-over-year increase of 9.5% and 1.5%, respectively. In the year-to-date period, ERIE has lost 12.2%.
Estimates for Erie Indemnity’s 2023 and 2024 earnings have moved 3.9% and 11.7% north, respectively, in the past 30 days. ERIE sports a Zacks Rank #1.
The Zacks Consensus Estimate for ERIE’s 2023 and 2024 earnings per share indicates a year-over-year increase of 26.1% and 13.6%, respectively. In the year-to-date period, ERIE has lost 12.2%.
The Zacks Consensus Estimate for Ryan Specialty Holdings’ 2023 and 2024 earnings per share indicates a year-over-year increase of 15.7% and 23.3%, respectively. In the year-to-date period, RYAN has gained 0.4%.
RYAN’s earnings surpassed estimates in two of the last four quarters, missed in one, and met estimates in one, the average beat being 2.67%. The stock carries a Zacks Rank #2.
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Here's Why Hold is an Apt Strategy for Nasdaq (NDAQ) Stock
Nasdaq Inc.’s (NDAQ - Free Report) improving organic growth, focus on ramping up the on-trading revenue base, buyouts to capitalize on growing market opportunities, effective capital deployment along with favorable growth estimates make it worth retaining in one’s portfolio.
NDAQ has a decent track record of beating earnings estimates in three of the last four quarters, the average being 4.40%. Earnings in the last five years grew 13.6%, better than the industry average of 10.5%.
Zacks Rank & Price Performance
Nasdaq currently carries a Zacks Rank #3 (Hold). In a year, the stock has gained 2.5% against the industry’s decrease of 6.2%.
Image Source: Zacks Investment Research
Northbound Estimate Revision
The Zacks Consensus Estimate for Nasdaq’s 2023 earnings has moved up by 2 cents, while the same for 2024 has moved north by 1 cent in the past 30 days, reflecting analysts’ optimism.
Optimistic Growth Projections
The Zacks Consensus Estimate for Nasdaq’s 2023 earnings is pegged at $2.71 per share, indicating a 1.9% increase from the year-ago reported figure on 3.6% higher revenues of $3.7 billion. The consensus estimate for 2024 earnings is pegged at $2.88, indicating a 6.2% increase from the year-ago reported figure on 5.2% higher revenues of $3.9 billion.
The expected long-term earnings growth rate is currently pegged at 4.4%. It carries a Growth Score of B.
Return on Equity
Return on equity was 22.2% in the trailing 12 months, better than the industry average of 10.8%.
Growth Drivers
Nasdaq’s focus on generating more revenues from high-growth Market Technology and Investment Intelligence segments and diverting R&D spending toward higher-growth products bodes well for growth. NDAQ targets 5-7% long-term growth from a non-trading revenue base.
To capitalize on the opportunities in cryptocurrency markets, Nasdaq has been accelerating its technology expansion. Its SMARTS surveillance in non-financial markets is in tandem with this growth strategy. Adena Friedman, chair & CEO of Nasdaq, stated that in recent times there has been a radical change in technological innovation in artificial intelligence. Thus, NDAQ has been making investments in proprietary data, and migrating markets and SaaS solutions to the cloud to reap benefits.
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 consolidated 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 in Investment Intelligence, 13%-16% in Market Technology and 3%-5% in Corporate Platform segments over the medium term.
Nasdaq has a healthy balance sheet and cash position along with modest operating cash flow from its diverse business model. This in turn should continue to support effective capital deployment.
Nasdaq has been hiking dividends at a nine-year CAGR (2018-2023) of 6%. It had $491 million remaining under authorization as of Mar 31, 2023.
However, due to a change in corporate structure, NDAQ expects to incur $115 million to $145 million in pretax charges, of which about 40% will be non-cash charges. Nonetheless, this will help unlock revenue synergies. Nasdaq estimates benefits in the form of combined annual run rate operating efficiencies and revenue synergies of at least $30 million by 2025.
Stocks to Consider
Some better-ranked stocks from the finance sector are CME Group (CME - Free Report) , Erie Indemnity (ERIE - Free Report) and Ryan Specialty Holdings (RYAN - Free Report) .
Estimates for CME Group’s 2023 and 2024 earnings have moved 0.8% north each in the past 30 days. CME Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CME’s 2023 and 2024 earnings per share indicates a year-over-year increase of 9.5% and 1.5%, respectively. In the year-to-date period, ERIE has lost 12.2%.
Estimates for Erie Indemnity’s 2023 and 2024 earnings have moved 3.9% and 11.7% north, respectively, in the past 30 days. ERIE sports a Zacks Rank #1.
The Zacks Consensus Estimate for ERIE’s 2023 and 2024 earnings per share indicates a year-over-year increase of 26.1% and 13.6%, respectively. In the year-to-date period, ERIE has lost 12.2%.
The Zacks Consensus Estimate for Ryan Specialty Holdings’ 2023 and 2024 earnings per share indicates a year-over-year increase of 15.7% and 23.3%, respectively. In the year-to-date period, RYAN has gained 0.4%.
RYAN’s earnings surpassed estimates in two of the last four quarters, missed in one, and met estimates in one, the average beat being 2.67%. The stock carries a Zacks Rank #2.