NASDAQ (NASDAQ: NDAQ) stock has had a strong start to the year, gaining 7% year-to-date, although it is currently trading below its estimated fair value of $67 per share. The stock has shown gains of 35% since early January 2021, outperforming the S&P 500 over the past three years. However, there have been periods of inconsistency in NDAQ’s performance, with returns of 58% in 2021, -12% in 2022, and -5% in 2023. It underperformed the S&P 500 in 2023, reflecting the challenges faced by individual stocks in beating the benchmark index in recent years. In contrast, the Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500 during the same period, thanks to better returns with less risk.
In the first quarter of 2024, NASDAQ reported mixed financial results, with total revenues reaching $1.67 billion, up 9% year-over-year. Net revenues also saw a significant increase of 22%, driven by growth in the capital access platform and financial technology segments. However, market services revenues declined by 10%, leading to a drop in operating income to $410 million. Adjusted net income also decreased by 23% year-over-year to $234 million. For the full year 2023, the company reported a 3% decrease in revenue to $6.06 billion, but net revenues increased by 9% to $3.9 billion due to growth in certain segments.
Looking ahead, NASDAQ is expected to see revenues of $6.96 billion for the full year 2024, with adjusted net income likely to remain stable. This would result in a GAAP EPS figure of $2.41, leading to a valuation of $67 per share. The company’s performance will be influenced by factors such as the overall macroeconomic environment, including high oil prices and elevated interest rates, which could impact its ability to outperform the S&P 500 in the coming months. It remains to be seen whether NASDAQ will experience a strong jump in performance or face challenges similar to those in 2023.
Overall, NASDAQ stock has shown resilience and growth over the past few years, despite periods of underperformance. With a focus on maintaining strong financial performance and managing operating expenses, the company aims to continue delivering value to its shareholders. The fluctuating performance of individual stocks in comparison to market indices highlights the importance of diversification and risk management for investors. By investing in well-performing portfolios such as the Trefis High Quality Portfolio, investors can potentially achieve better returns with reduced risk than trying to beat the benchmark index on their own.
In conclusion, NASDAQ’s stock performance has been positive so far in 2024, with potential for growth in revenues and stable net income for the year. The company’s focus on innovation and technology-driven solutions in the financial services sector positions it well for future success. However, external factors such as the macroeconomic environment and market conditions could impact its performance in the short term. Investors should consider the company’s fundamentals and valuation metrics when making investment decisions, ensuring a balanced and diversified portfolio that mitigates risks and maximizes returns.
