On Aug 28, shares of The Nasdaq OMX Group, Inc. (NDAQ) touched a 52-week high of $43.92 buoyed by the solid second-quarter earnings beat. With about 0.8 million shares exchanging hands in the last trading session, the stock gained 0.2% to close at $43.80. The year-to-date return on the stock was 10% better than NASDAQ’s return of 9.1%
With respect to earnings performance, Nasdaq has delivered positive surprises in all the last four quarters, with an average beat of 3.8%.
In the second quarter, Nasdaq posted operating earnings per share of 70 cents, exceeding the Zacks Consensus Estimate by 2.9% and improving 12.9% year over year on 16% higher revenues. The quarter witnessed growth in the non-trading business segments, which saw organic improvement of 9%. Its acquisition of Thomson Reuters' IR, PR and Multimedia businesses and the eSpeed electronic fixed income platform were also accretive to the results.
A greater magnitude of increase in revenues offset higher expenses, driving margin expansion by 30 basis points.
In the last six months, the company lowered its debt burden by about 7%, with the debt level standing at $2.41 billion at quarter end. To return value to shareholders, the company also bought back $93 million shares besides paying $25 million as dividends.
The Zacks Consensus Estimate for 2014 is currently pegged at $2.91 while the same is $3.30 for 2015. These translate to a year-over-year improvement of 12% and 13.3%, respectively. The expected long-term growth rate for the stock is 10.5%.
Other Stocks to Consider
Nasdaq carries a Zacks Rank #3 (Hold). Better-ranked financial stocks include VantivInc, (VNTV), Green Dot Corporation (GDOT) and Equifax Inc. (EFX). While Green Dot and Vantiv sport a Zacks Rank #1 (Strong Buy), Equifax carries a Zacks Rank #2 (Buy).