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What's in Store for Nasdaq (NDAQ) This Earnings Season?

Zacks Equity Research

Nasdaq, Inc. NDAQ is slated to report second-quarter 2019 results on Jul 24, before market open. The company delivered positive earnings surprise in three of the last four quarters.

Let’s see how things are shaping up for this announcement.

Expansion of index and analytics businesses, growth in exchange data products across U.S. and Nordic equities, solid options and fixed income businesses are likely to aid Nasdaq’s second-quarter results.

Strategic buyouts are also expected to boost the company’s operational performance in the soon-to-be reported quarter. Contribution from eVestment is likely to aid revenues at Investment Data & Analytics business.

Results at Investment Services segment are likely to benefit from improved Investment Data & Analytics, Index and Market Data business.

The company reported mixed volumes for the second quarter. U.S. equity options volume increased 0.7% year over year to 420 million contracts. European options and futures volume rose 3.7% year over year to 22.7 million contracts.

While revenues per contract for U.S. equity options remained in line year over year at 15 cents, the same for European options and futures deceased 9.1% to 40 cents.

Higher listings are expected to boost listing revenues in the second quarter. In the second quarter, 3,735 companies were listed on Nasdaq compared with 3,632 in the year-ago period. Total listings grew 2.4% year over year to 4,109. The Zacks Consensus Estimate for listing services revenues is pegged at $72 million, indicating flat numbers compared with the year-ago period.

Improved market technology and higher listing and information revenues are likely to drive non-transaction revenues. Market Technology and Information Services businesses offer the biggest growth opportunities per the company’s developmental strategies. The Zacks Consensus Estimate for Marketing Information Service revenues is pegged at $195 million, indicating an increase of 11.4% from the year-ago reported figure.

Interest expenses are expected to be on the higher side due to a high debt level. Operating expenses are expected to rise owing to organic growth initiatives. These are expected to put pressure on margin.

The Zacks Consensus Estimate for earnings is pegged at $1.19, indicating 0.9% increase from the year-ago period figure.

What Our Quantitative Model Says

Our proven model does not conclusively show that Nasdaq is likely to beat estimates this reporting cycle. This is because the stock does not have the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Nasdaq has an Earnings ESP of -0.28. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Nasdaq carries a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks from the finance sector with the perfect combination of elements to surpass estimates in their upcoming releases.

MarketAxess Holdings Inc. MKTX is set to report second-quarter earnings on Jul 24. The stock has an Earnings ESP of +1.79% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Federated Investors, Inc. FII is set to report second-quarter earnings on Jul 25. The stock has an Earnings ESP of +1.26% and a Zacks Rank of 3.

Intercontinental Exchange Inc. ICE is set to report second-quarter earnings on Aug 1. The stock has an Earnings ESP of +0.36% and a Zacks Rank of 2.

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