NASDAQ stock (NASDAQ: NDAQ) has gained 23% YTD as in comparison with a 17% rise within the S&P500 index. In sharp distinction, Nasdaq’s peer CME Group (NASDAQ: CME) is up 5% YTD. Total, at the present worth of $71 per share, it is buying and selling on the identical degree as its truthful worth – Trefis’ estimate for NASDAQ’s valuation.
Amid the present monetary backdrop, NDAQ inventory has seen extraordinarily robust features of 75% from ranges of $40 in early January 2021 to round $70 now, vs. a rise of about 50% for the S&P 500 over this roughly 3-year interval. Nevertheless, the enhance in NDAQ inventory has been removed from constant. Returns for the inventory have been 60% in 2021, -11% in 2022, and -4% in 2023. Compared, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that NDAQ underperformed the S&P in 2023.
In reality, constantly beating the S&P 500 – in good occasions and dangerous – has been tough over current years for particular person shares; for heavyweights within the Financials sector together with JPM, V, and MA, and even for the megacap stars GOOG, TSLA, and MSFT. In distinction, the Trefis Excessive High quality (HQ) Portfolio, with a set of 30 shares, has outperformed the S&P 500 annually over the identical interval. Why is that? As a gaggle, HQ Portfolio shares supplied higher returns with much less danger versus the benchmark index; much less of a roller-coaster experience as evident in HQ Portfolio efficiency metrics. Given the present unsure macroeconomic setting with excessive oil costs and elevated rates of interest, might NDAQ face the same state of affairs because it did in 2023 and underperform the S&P over the following 12 months – or will it see a powerful soar?
The corporate posted blended ends in the second quarter of FY 2024, with revenues beating expectations however earnings lacking the consensus. It reported whole revenues of $1.79 billion – up 25% y-o-y, which translated into web revenues (revenues much less transaction-based bills) of $1.16 billion (up 25%). The expansion was primarily pushed by a 79% soar within the monetary know-how unit, adopted by an 18% enhance available in the market providers and a ten% rise within the capital entry platform section. Nevertheless, the optimistic impression was partially offset by a 25% enhance in transaction-based bills. On the price entrance, whole working bills as a % of revenues witnessed an unfavorable rise within the quarter. Additional, curiosity expense was $102 million vs $36 million. It led to an adjusted web revenue of $222 million – down 17% y-o-y.
Transferring ahead, we anticipate NASDAQ’s whole revenues to the touch $7.1 billion for the complete yr 2024, translating into web revenues of $4.68 billion. Moreover, the adjusted web revenue margin is prone to stay round the earlier yr’s degree. It can end in a GAAP EPS determine of $2.48, which coupled with a P/E a number of of slightly below 29x, will result in a valuation of $71.
| Returns | Aug 2024 MTD [1] |
2024 YTD [1] |
2017-24 Whole [2] |
| NDAQ Return | 5% | 23% | 260% |
| S&P 500 Return | 1% | 17% | 150% |
| Trefis Bolstered Worth Portfolio | 5% | 12% | 734% |
[1] Returns as of 8/30/2024
[2] Cumulative whole returns because the finish of 2016
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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.
