Nasdaq Scales 52-Week High: Can It Sustain The Bull Run?

Shares of Nasdaq Inc. (NASDAQ:NDAQ) hit a new 52-week high of $91.94 on May 22, banking on solid April volumes as well as strong first-quarter results. With about 0.9 million shares traded in the last session, the stock closed at $91.51, gaining 0.3%.

Solid Q1 Results

Nasdaq's bottom line of $1.24 outpaced the Zacks Consensus Estimate by 5.1% and improved 31% year over year on higher revenues, sturdy volumes, a lower tax incidence and solid market share.

Shares of the company have gained 4.2% since it posted strong first-quarter results, outperforming the industry’s decline of 0.06%. This Zacks Rank #3 (Hold) global exchange company has a decent surprise history, having surpassed consensus estimates for six straight quarters, with an average beat of 4.2%. This trend of consecutive estimate beats underscores the company’s operational excellence.

Strong April Volumes

Nasdaq posted improved volumes for April. While U.S. equity options volume expanded 22.1% year over year to 138 million contracts, European options and futures volumes were 7.7 million contracts in the month, up 30.5% year over year.

What Should Help the Stock Keep the Price Momentum Alive?

As a part of its growth strategy, Nasdaq intensified its focus on Market Technology and Information Services businesses, offering biggest growth opportunities. It also emphasizes core special marketplace platform businesses. Nasdaq intends to lower its capital resources for investment in business, failing to offer considerable growth for the company.

Nasdaq’s growth has also been driven by its initiatives to accelerate a non-transaction revenue base including market technology, listing and information revenues. Management estimates medium-term outlook of 8-11% growth.

For 2018, Nasdaq projects non-GAAP operating expense in the range of $1.295-$1.335 billion, down from the earlier guided range of $1.375-$1.415 billion. This primarily reflects the closing of the divestitures of the Public Relations Solutions and Digital Media Services businesses in April. Lower expense will likely aid margin expansion.

Nasdaq boasts a healthy balance sheet and a solid cash position along with modest operating cash flow from its diverse business model. This in turn helps the company to engage in effective capital deployment. While Nasdaq has a $627 million share buyback program under its authorization, its five-year dividend growth rate of 38.7% is better than the industry average of 19.5%.

The Zacks Consensus Estimate for 2018 reflects a 20.7% increase on 5.1% higher revenues. The consensus mark for revenues and earnings per share in 2019 translates into a year-over-year improvement of 9.2 % and 3.6%, respectively.

Over the last 30 days, the consensus estimate has moved north by 1.4% for 2018 and 0.9% for 2019 as most analysts have raised their estimates.

Stocks to Consider

Some better-ranked stocks from the finance sector are CME Group (NASDAQ:CME) , The Navigators Group, Inc. (NASDAQ:NAVG) and The Progressive Corporation (NYSE:PGR) , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CME Group operates contract markets for the trading of futures and options on futures contracts worldwide. It pulled off an average four-quarter positive surprise of 1.86%.

Navigators Group underwrites marine, property and casualty plus professional liability insurance products and services in the United States and worldwide. The company came up with positive earnings surprises in three of the trailing four quarters, with an average beat of 14.66%.

Progressive Corporation provides personal and commercial auto insurance, residential property insurance and other specialty property-casualty insurance and related services, primarily in the United States. The company pulled off positive surprises in three of the last four quarters, with an average beat of 6.23%.

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