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Nasdaq: Growth Prospects Bright, Escalating Expenses a Drag

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On Jun 30, 2016, we updated a research report on Nasdaq, Inc. (NDAQ - Free Report) .

Nasdaq has been expanding its portfolio via strategic acquisitions. The company’s prudent acquisitions and organic initiatives that enable entry into new markets and cross-selling opportunities across a low-cost and highly-flexible platform remain its main growth drivers.

Nasdaq continues to bolster its operating leverage through efficient business management. This, in turn, enhances its ability to invest in new business building initiatives.

Nasdaq boasts a healthy balance sheet and cash position along with modest operating cash flow from its diverse business model. Moreover, the company’s improving leverage and a healthy balance sheet support accelerated capital deployment for shareholder-friendly moves like dividend hikes and share repurchases, which boost investor confidence. In addition, management is on track to further reduce leverage ratio and free up capital for incremental business investments and shareholders’ return.

NASDAQ INC Price and Consensus

NASDAQ INC Price and Consensus | NASDAQ INC Quote

However, Nasdaq has witnessed a rise in expenses owing to the development and diversification of its business. This is likely to adversely affect the company’s operating leverage as well as margins amid an intensely competitive environment.

Moreover, currency fluctuations and pricing continue to weigh on Nasdaq’s performance.

Due to the absence of any near-term catalyst, the Zacks Consensus Estimate has been witnessing downward revision over the last 60 days.

The Zacks Consensus Estimate for the second quarter is currently pegged at 88 cents. Our proven model does not conclusively show that the company is likely to beat estimates this quarter. This is because a Zacks Rank #3 (Hold) is favorable for an earnings beat, an Earnings ESP of -2.27% makes prediction difficult.

Stocks to Consider

Some better-ranked stocks from the finance sector are Bats Global Markets , Markel Corp. (MKL - Free Report) and Cincinnati Financial Corp. (CINF - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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