Nasdaq, Inc. NDAQ is slated to report fourth-quarter 2017 results on Jan 31 before the market opens. Last quarter, the company delivered a positive surprise of 3.92%.
Let’s see, how things are shaping up for this announcement.
Market Services segment, a major contributor to Nasdaq’s total revenues, is expected to have delivered solid numbers banking on backlog, new client wins, and favorable business trends. Higher revenues from International Securities Exchange and European cash equities likely have driven the Market Services’ revenues. The Zacks Consensus Estimate for Market Services revenues for the to-be-reported quarter is pegged at $83 million, an increase of 7.8% from the year-ago period.
Improved market technology revenues plus listing and information revenues are estimated to boost organic growth in non-transaction revenues.
While U.S. equity options volume improved 12.1% year over year to 399 million contracts, revenues per contract were 14 cents and declined 18.8% on a year-over-year basis. European options and futures volumes were 19.8 million contracts in the fourth quarter, down 6.6% year over year. Revenues per contract were 56 cents, up 21.7% on a year-over-year basis.
The Zacks Consensus Estimate for revenues in fourth-quarter 2017 is pegged at $628 million, up 4.8% year over year.
However, the company’s expenses might have increased on account of development and diversification of its business. This in turn has also likely restricted the operating margin expansion. For 2017, the company estimates non-GAAP operating expenses in the range of $1.28-$1.29 billion.
Nasdaq, Inc. Price and EPS Surprise
What Our Quantitative Model Says
Our proven model does not conclusively show that Nasdaq is likely to beat estimates this quarter. This is because a stock must have the right combination of the two main ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for an earnings beat. But that is not the case here as you can see below.
Zacks ESP: Nasdaq has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.01. 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 #2, which increases the predictive power of ESP. However, an earnings ESP of 0.00% makes surprise prediction difficult.
You can see the complete list of today’s Zacks #1 Rank stocks here.
We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Some investment managers worth considering from the finance sector with the right combination of elements to come up with an earnings beat this time around are as follows:
American Financial Group, Inc. AFG has an Earnings ESP of +1.21% and a Zacks Rank of 2. The company is slated to report fourth-quarter earnings on Jan 31.
Apollo Global Management, LLC APO has an Earnings ESP of +3.08% and is a Zacks #2 Ranked player. The company is slated to announce fourth-quarter earnings on Feb 1.
American Equity Investment Life Holding Company AEL has an Earnings ESP of +2.99% and is a #2 Ranked player. The company is slated to release fourth-quarter earnings on Feb 7.
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