Can Nasdaq (NDAQ) Keep Its Earnings Streak Alive in Q4?

Nasdaq, Inc. NDAQ is slated to report fourth-quarter 2018 results on Jan 30, before market open. The company boasts a stellar record of positive earnings surprises. It outpaced estimates for eight straight quarters with the average beat being 3.35%.

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

Nasdaq is expected to benefit from growth of its index and analytics businesses, exchange data products across U.S. and Nordic equities and options and fixed income businesses.

Strategic buyouts continue to enhance the company’s capabilities, thereby aiding its performance.

Improved trading volume should continue to drive better performance. In the fourth quarter of 2018, U.S. equity options volume increased 10.8% year over year to 482 million contracts, while European options and futures registered 22.6 million contracts, up 14.1% year over year.

Though revenues per contract for U.S. equity options increased 15.4% year over year to 15 cents, the same for European options and futures deceased 12.5% to 49 cents.

Rise in listings is expected to boost listing revenues in the fourth quarter. There are 3,685 listed companies on Nasdaq compared with 3,560 in the year-ago period. Total listings grew 3.7% from the year-earlier quarter to 4,059. The Zacks Consensus Estimate for listing services revenues is pegged at $73 million, up 2.8% year over year.

Non-transaction revenues are expected to rise on higher listing plus Market Technology and Information Services 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 $182 million, up 16.7% year over year.

It estimates 2018 non-GAAP operating expenses in the range of $1.310-$1.335 billion due to appointments and promotions, seasonal compensation and higher fourth-quarter marketing spend, which will affect margins.

The Zacks Consensus Estimate for earnings is pegged at $1.24, indicating 18.1% increase on a year-over-year basis.

Nasdaq, Inc. Price and EPS Surprise

 

What Our Quantitative Model Says

Our proven model conclusively shows that Nasdaq is likely to beat estimates this reporting cycle. This is because the stock has 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 +0.99. 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. Thus, this combination makes us confident of a positive 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 stocks from the finance sector with the perfect combination of elements to surpass estimates in their upcoming releases.

Arthur J. Gallagher & Co. AJG is set to report fourth-quarter earnings on Jan 31. The stock has an Earnings ESP of +3.92% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Axis Capital Holdings Ltd. AXS is set to report fourth-quarter earnings on Jan 30. The stock has an Earnings ESP of +1.49% and a Zacks Rank of 3.

Boston Properties, Inc. BXP has an Earnings ESP of +0.60% and a Zacks Rank of 3. The company will announce fourth-quarter earnings on Jan 29.

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Arthur J. Gallagher & Co. (AJG): Free Stock Analysis Report
 
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