Why Is Nasdaq (NDAQ) Down 1.8% Since Last Earnings Report?

It has been about a month since the last earnings report for Nasdaq (NDAQ). Shares have lost about 1.8% in that time frame, outperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Nasdaq due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Nasdaq's Q4 Earnings Surpass Estimates on Higher RevenuesNasdaq reported fourth-quarter 2024 adjusted earnings per share of 76 cents, beating the Zacks Consensus Estimate by 1.3%. The bottom line improved 5% year over year.The improvement was mainly driven by higher revenues across three divisions, organic growth as well as reduced expenses.Performance in DetailNasdaq’s net revenues of $1.2 billion increased 10% year over year. The top line missed the Zacks Consensus Estimate by 0.1%.Annualized Recurring Revenue (ARR) increased 7% year over year.Annualized SaaS revenues increased 14% and represented 37% of ARR. Organic growth was 7%.Market Services net revenues were $268 million, up 8%. The increase was primarily driven by a $15 million increase in U.S. equity derivatives and a $14 million increase in U.S. cash equities. It was partly offset by a $4 million decrease in U.S. tape plan revenues. Organic growth was 8%.Revenues at the Solutions business increased 10% year over year to $949 million, reflecting strong growth from Index and Financial Technology.Adjusted operating expenses were $710 million, down 7% from the year-ago period. The decrease was due to lower merger and strategic initiative costs and lower general and administrative expense. It was partially offset by expenses related to the acquisition of Adenza, which resulted in an incremental $29 million in amortization expense of acquired intangible assets, $24 million of other AxiomSL and Calypso operating expenses, as well as organic growth driven by increased investments in technology and people to drive innovation and long-term growth. Our estimate for operating expenses was $573.4 million.The company’s operating margin of 55% remained flat year over year.The Nasdaq stock market welcomed 162 new company listings in the fourth quarter of 2024, including 66 initial public offerings. The number of listed companies was 4,075 at the end of the quarter.Full-Year HighlightsFor 2024, the company reported adjusted earnings per share of $2.82, which remained unchanged year over year. The figure also beat the Zacks Consensus Estimate by 0.3%.Net revenues were $4.6 billion, up 19% year over year. This included Solutions revenues, which increased 25%. Market Services net revenues were $1 billion, which rose 3% on a reported as well as organic basis. ARR was $2.8 billion, which grew 7% on a reported as well as organic basis. Net revenues beat the Zacks Consensus Estimate by 20%.Operating margin of 54% expanded 100 basis points year over year.The Nasdaq stock market welcomed 463 new company listings, including 180 initial public offerings. The number of listed companies was 4,075 at year end.Financial UpdateNasdaq had cash and cash equivalents of $592 million as of Dec. 31, 2024, which increased 30.6% from the end of 2023. Long-term debt increased to $9.1 billion, as of Dec. 31, 2024, which decreased 10.6% from the end of 2023.Nasdaq generated $705 million in cash flow from operations in the reported quarter.Capital DeploymentNasdaq returned $138 million to shareholders in the fourth quarter of 2024 through dividends. Nasdaq also repurchased $181 million of senior unsecured notes in the fourth quarter of 2024.The board of directors approved a dividend of 24 cents per share. The dividend will be paid out on March 28, 2025, to shareholders of record at the close of business on March 14, 2025.As of Dec. 31, 2024, $1.7 billion remained under the board-authorized share repurchase program.2025 GuidanceNasdaq expects 2025 non-GAAP operating expenses to be in the range of $2,245-$2,325 million.Nasdaq forecasts 2025 non-GAAP tax rate guidance to be in the range of 22.5-24.5%.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended upward during the past month.VGM ScoresCurrently, Nasdaq has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Nasdaq has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Nasdaq, Inc. 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