Yahoo Finance Should You Retain Nasdaq (NDAQ) Stock in Your Portfolio?
Nasdaq Inc. NDAQ has been gaining momentum on the back of well performing Market Technology and Investment Intelligence segments, favorable growth estimates and effective capital deployment.
Earnings Surprise History
Nasdaq has a solid record of beating earnings estimates in each of the last six quarters.
Zacks Rank & Price Performance
Nasdaq currently carries a Zacks Rank #3 (Hold). In the past six months period, the stock has gained 15.3% against the industry’s decline of 5.2%.
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Optimistic Growth Projections
The Zacks Consensus Estimate for Nasdaq’s 2023 earnings is pegged at $2.81, indicating growth of 4.9% from the year-ago reported figure on 4.6% higher revenues of $3.7 billion.
The expected long-term earnings growth rate is currently pegged at 4.7%.
Return on Equity
The company’s return on equity was 22.1% in the trailing twelve months, better than the industry average of 11.4% and expanded 330 basis points year over year.
Business Tailwinds
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.
Nasdaq’s technology expansion with SMARTS surveillance in nonfinancial markets testifies the company’s focus on capitalizing on emerging opportunities in the cryptocurrency markets. It remains focused on expansion of Trade Surveillance, data analytics and integrity solutions.
The anti-financial crime technology business should continue to gain from increased demand for Verafin's fraud and anti-money laundering solutions. Nasdaq acquired Verafin in February 2021. The combination will complement Nasdaq's established reg tech leadership to create a global SaaS leader focused on the $12.5 billion market for anti-financial crime technology solutions.
Nasdaq aims 40%-50% SaaS revenues as a percentage of total revenues by 2025.
In June 2022, Nasdaq acquired Metrio. The acquisition expanded the corporate serving ESG solution set and complemented the framework-based approach of the existing OneReport solution.
NDAQ estimates growth from its index and analytics businesses, followed by moderate growth in its exchange data products across the 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 Platforms over the medium term. Nasdaq expects Market Technology revenues to grow 15.3% to $534 million in 2022 while Corporate Platform revenues are expected to grow 9.9% to $673.8 million.
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. Nasdaq has raised dividend at an eight-year CAGR (2015-2022) of 11.6% and had $293 million remaining under its share repurchase authorization as of Sep 30, 2022.
Stocks to Consider
Some top-ranked stocks from the finance sector are Portman Ridge Finance Corporation PTMN, Prospect Capital Corporation PSEC and Cboe Global Markets, Inc. CBOE. While Portman Ridge and Prospect Capital sport a Zacks Rank #1 (Strong Buy), Cboe Global carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Portman Ridge’s 2023 earnings indicates 2.3% year-over-year growth. In the past year, Portman Ridge’s stock has lost 9.4%.
The Zacks Consensus Estimate for PTMN’s 2023 earnings has moved 9.9% north in the past 60 days.
Prospect Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 18.39%. In the past year, Prospect Capital’s stock has lost 19.1%.
The Zacks Consensus Estimate for PSEC’s 2023 earnings per share indicates year-over-year increase of 2.9%.
Cboe Global’s earnings surpassed estimates in three of the last four quarters and missed in one, the average surprise being 4.92%. In the past year, Cboe Global’s stock has lost 0.3%.
The Zacks Consensus Estimate for CBOE’s 2023 earnings per share indicates year-over-year increase of 3.4%.
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Nasdaq, Inc. (NDAQ) : Free Stock Analysis Report
Cboe Global Markets, Inc. (CBOE) : Free Stock Analysis Report
Prospect Capital Corporation (PSEC) : Free Stock Analysis Report
Portman Ridge Finance Corporation (PTMN) : Free Stock Analysis Report
