NASDAQ stock (NASDAQ: NDAQ) has gained 7% year-to-date, lagging behind the 11% rise in the S&P 500 index. At its current price of $62 per share, it is nearly 7% below its fair value of $67, according to Trefis’ estimate. The stock has shown strong gains of 35% since early January 2021, but the increase has not been consistent. Returns for NDAQ were 58% in 2021, -12% in 2022, and -5% in 2023, underperforming the S&P 500. In comparison, the Trefis High Quality Portfolio, consisting of 30 stocks, has outperformed the S&P 500 each year over the same period, providing better returns with less risk.
In the first quarter of 2024, NASDAQ reported mixed results, with revenues beating the consensus but earnings missing expectations. Total revenues were $1.67 billion, up 9% year-over-year, with net revenues reaching $1.12 billion, up 22%. The growth was driven by the capital access platform and financial technology segments, offset by a decline in market services revenues. Total operating expenses as a percentage of revenues increased, leading to a marginal drop in operating income. Adjusted net income declined by 23% year-over-year to $234 million.
In FY 2023, NASDAQ’s revenue decreased by 3% year-over-year to $6.06 billion, while net revenues increased by 9% year-over-year to $3.9 billion. The increase in net revenues was due to growth in the capital access platform and financial technology segments, offset by a decrease in market services revenues. Total operating expenses increased by 15%, resulting in a 6% year-over-year decline in adjusted net income to $1.06 billion.
Looking ahead, Trefis expects NASDAQ’s revenues to reach $6.96 billion for the full year 2024, with adjusted net income likely to remain around the previous year’s level. This is expected to result in a GAAP EPS figure of $2.41, leading to a valuation of $67 per share based on a P/E multiple just below 28x. The uncertain macroeconomic environment with high oil prices and elevated interest rates may impact NASDAQ’s performance over the next 12 months, potentially causing it to underperform the S&P 500.
Overall, while NASDAQ has shown strong gains in recent years and has the potential for future growth, its performance has been inconsistent compared to the broader market. Investors should consider factors such as the company’s financial results, market conditions, and industry trends when making investment decisions. The Trefis High Quality Portfolio has consistently outperformed the S&P 500, providing a less risky investment option with better returns. As the market continues to evolve, it is essential for investors to stay informed and make informed decisions to maximize their returns and minimize risks.
