Is a Beat in Cards for Nasdaq (NDAQ) This Earnings Season?

Nasdaq, Inc. NDAQ is slated to report first-quarter 2018 results on Apr 25 before the market opens. Last quarter, the company delivered a positive surprise of 3.96%.

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

New client wins, solid backlog and favorable business trends are likely to have driven Market Services in the to-be-reported quarter. A considerable market share in U.S. options, U.S. equities, European equities and strong Trade Management services are expected to have added to this upside. The Zacks Consensus Estimate for Market Services revenues is pegged at $160 million, a 15.9% increase from the year-ago period.

Strategic acquisitions might have aided the top line.

U.S. equity options volume expanded 23.1% year over year to 474 million contracts, European options and futures volumes were 22.3 million contracts in the first quarter, up 2.8% year over year.

Also, non-transaction revenue base is likely to have improved, banking on the strength of market technology, listing and information revenues. These in turn have possibly boosted the top line in the quarter to be reported. The Zacks Consensus Estimate for revenues is pegged at $644 million, up 10.5% year over year.

Non-transaction revenues are expected to have increased, driven by market technology, listing as well as information revenues. The Zacks Consensus Estimate for Market technology revenues stands at $79 million, up 17.9% year over year while the same for listing services revenues is projected at $70 million, up 7.7% year over year.

A lower tax incidence, owing to tax reform implemented earlier this year, should provide an extra boost to the bottom line.

However, revenues per contract for U.S. equity options declined by a penny to 15 cents, though the same for European options and futures increased 11.9% to 47 cents.

What Our Quantitative Model Says

Our proven model shows that Nasdaq is likely to beat estimates this quarter. This is because the stock has 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) — to increase the odds of an earnings surprise.

Zacks ESP: Nasdaq has an Earnings ESP of +0.31%.

Nasdaq, Inc. Price and EPS Surprise

Nasdaq, Inc. Price and EPS Surprise | Nasdaq, Inc. Quote

 

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.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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

Other Stocks to Consider

Some other companies worth considering from the finance sector with the right combination of elements to also come up with an earnings beat this time around are as follows:

Aflac Incorporated AFL has an Earnings ESP of +1.73% and a Zacks Rank #2. The company is slated to report first-quarter earnings on Apr 25.

Altisource Portfolio Solutions S.A. ASPS has an Earnings ESP of +17.65% and is a Zacks #3 Ranked player. The company is slated to announce first-quarter earnings on Apr 26.

BofI Holding, Inc. BOFI has an Earnings ESP of +0.86% and is a #3 Ranked player. The company is slated to release first-quarter earnings on Apr 26.

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