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Nasdaq Inc NDAQ

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Another Quarter of Good Results as Nasdaq Benefits From First Full Quarter With Verafin

Michael Miller Equity Analyst

Analyst Note

| Michael Miller |

Narrow-moat-rated Nasdaq reported good second-quarter earnings, comfortably beating the FactSet consensus EPS estimate of $1.76 with reported EPS of $1.90. Net revenue increased 21% year over year, or 15% when adjusted for the acquisition of Verafin and changes in foreign-exchange rates. Sequentially, revenue was essentially unchanged; however, this was largely due to market services revenue declining 7.7% from the last quarter as equity trading volume fell from its fever pitch earlier in the year. We were expecting trading conditions to calm down, and trading volume remains strong despite the decrease, particularly at the company's options exchanges. Nasdaq is likely a beneficiary of the transition to $0-commission trades at retail brokers, though it will need to contend with new competitors in the equity exchange space like Members Exchange, which launched at the end of 2020. We do not expect to change our fair value estimate as we incorporate these results.

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Company Profile

Business Description

Founded in 1971, Nasdaq is primarily known for its equity exchange, but in addition to its market-services business (about 35% of sales), the company sells and distributes market data as well as offers Nasdaq-branded indexes to asset managers and investors through its information-services segment (30%). Nasdaq's corporate-services business (20%) offers listing services and related investor relations products to publicly traded companies and through the company's market technology group (15%), Nasdaq facilitates the exchange operations of other exchanges throughout the world and provides financial compliance services.

Contact
151 W. 42nd Street
New York, NY, 10036
T +1 212 401-8700
Sector Financial Services
Industry Financial Data & Stock Exchanges
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 5,585

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