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Here's Why Hold is an Apt Strategy for Nasdaq (NDAQ) Now

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·4 min read
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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 12 quarters.

Zacks Rank & Price Performance

Nasdaq currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has rallied 21.8% compared with the industry’s increase of 17.4%, the Finance sector’s rise of 9% and the Zacks S&P 500 composite’s increase of 13.4%.

Zacks Investment Research
Zacks Investment Research


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Growth Projections

The Zacks Consensus Estimate for Nasdaq’s 2022 earnings is pegged at $7.88, indicating a 4.2% increase from the year-ago reported figure on 5% higher revenues of $3.6 billion. The consensus estimate for 2023 earnings is pegged at $8.52, indicating an 8.2% increase from the year-ago reported figure on 5.4% higher revenues of $5.6 billion. The long-term earnings growth rate is currently pegged at 13.5%, better than the industry average of 9.6%.

Return on Equity (ROE)

Return on equity was 19.8% in the trailing twelve months, better than the industry average of 14.3%.

Estimate Revision

The Zacks Consensus Estimate for 2022 has moved north by 2.1% while the consensus estimate for 2023 has moved 2.3% in the past 60 days, reflecting analyst optimism.

Business Tailwinds

Nasdaq remains focused on repositioning its business and aims to generate revenues from high growth Market Technology and Investment Intelligence segments and diverted R&D spending toward higher-growth products. At the same time, NDAQ has divested non-core assets that fetched $700 million.

Technology expansion with SMARTS surveillance in non-financial markets reflects focus on emerging opportunities in the cryptocurrency markets.

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 is thus a strategic fit as the combination will complement Nasdaq's established reg tech leadership to create a global SaaS leader.

NDAQ estimates growth from its index and analytics businesses, followed by moderate growth in its exchange data products across U.S. and Nordic equities.

NDAQ 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. NDAQ had $784 million remaining under its share repurchase authorization as of Jan 25, 2022.

Solid Dividend History

Nasdaq has been hiking dividends at a seven-year CAGR (2015 – 2021) of 22.6%, driven by solid earnings. Its dividend yield is currently 1.2%, above the industry average of 1.1%.

Stocks to Consider

Some better-ranked stocks from the finance sector include OTC Markets Group Inc. OTCM, Deutsche Boerse AG DBOEY and International Money Express Inc. IMXI. While OTC Markets sports a Zacks Rank #1 (Strong Buy), Deutsche Boerse and International Money Express carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for OTC Markets Group’s 2022 earnings has moved up 7.3% in the past 30 days. The expected long-term earnings growth rate is pegged at 9%.

OTC Markets Group’s earnings surpassed estimates in each of the last four quarters, the average beat being 40.75%. In the past year, OTCM has gained 52.7%.

The Zacks Consensus Estimate for Deutsche Boerse’s 2022 and 2023 earnings per share indicates a year-over-year increase of 8.4% and 8.9%, respectively.

Deutsche Boerse’s earnings surpassed estimates in each of the last four quarters, the average beat being 8.05%. In the past year, DBOEY has gained 10.4%.

The Zacks Consensus Estimate for International Money Express’s 2022 earnings has moved up 12.2% in the past 30 days. IMXI’s earnings surpassed estimates in each of the last four quarters, the average beat being 16.37%.

In the past year, IMXI has gained 39.1%. The Zacks Consensus Estimate for IMXI’s 2022 earnings implies 12.9% year-over-year growth.


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Nasdaq, Inc. (NDAQ) : Free Stock Analysis Report

Deutsche Boerse AG (DBOEY) : Free Stock Analysis Report

OTC Markets Group Inc. (OTCM) : Free Stock Analysis Report

INTERNATIONAL MONEY EXPRESS, INC. (IMXI) : Free Stock Analysis Report

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