On Jan 8, 2016, we issued an updated research report on Nasdaq, Inc. NDAQ.
Sound business management decisions, that have a positive influence on the operating leverage of the company, helped Nasdaq to enhance its long-term growth efficiency. On the back of organic initiatives, the company enjoys entry as well as cross-selling opportunities into new markets that will ultimately drive organic growth.
A solid cash position and a healthy balance sheet have enabled Nasdaq to engage in shareholder-friendly moves through dividend hikes and share repurchases which also reflect the company’s effective capital deployment.
The securities exchange provider has been making substantial progress when it comes to expanding its inorganic growth profile through strategic acquisitions. Its recent endeavor includes the acquisitions of Chi-X Canada, an Alternative Trading System for the Toronto Stock Exchange (“TSX”) and TSX Venture Securities, from Chi-X Global. Nasdaq will gain access to the Canadian equities market with the help of this acquisition.
However, the company's escalating expenses are weighing on the operating margin. Moreover, being exposed to intense competition within the industry, the company is likely to face substantial operational and financial risks.
Nasdaq is set to report fourth-quarter results on Jan 28. The Zacks Consensus Estimate for the same is currently pegged at 90 cents, translating into a year-over-year increase of 19.33%. However, our proven model cannot conclusively state if the bottom line will beat or miss the estimate. This is because though a Zacks Rank #3 (Hold) increases the predictive power of an Earnings ESP, the company’s Earnings ESP of 0.0% makes complicates the predictive power.
Stocks to Consider
Some better-ranked stocks from the same sector are Intercontinental Exchange, Inc ICE, Primerica, Inc PRI and Reinsurance Group of America Inc. RGA. Each of these stocks holds a Zacks Rank #2 (Buy).
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