Nasdaq (NDAQ) After Fraud Prevention Deal And August Volumes With Valuation In Focus

Recent events around Nasdaq (NDAQ) have focused on its fraud prevention efforts, recurring technology and data revenues, and updated August trading volumes. Together, these developments give investors fresh context on the company’s diversified business model.

Nasdaq’s recent fraud prevention partnership news and August volume update come against a backdrop where the share price is around $96.88, with a 90 day share price return of 11% suggesting firm recent momentum. The 3 year total shareholder return of 96.31% points to a strong longer term record despite some short term pullbacks.

Spot emerging fintech and market infrastructure trends around Nasdaq by scanning our curated 19 high quality undiscovered gems, which pair strong fundamentals with under-the-radar growth stories.

The share price gain over the past 90 days could reflect growing conviction in Nasdaq’s fraud prevention and data businesses, or it could simply mark a sentiment reset after prior weakness. Which story does the current valuation tell?

Most Popular Narrative: 7% Undervalued

The most followed narrative currently values Nasdaq at $104.19 per share compared with the recent $96.88 close, which frames the recent share price strength in a different light.

Four crashes, four different causes, four different recovery timelines, two years, fifteen years, years, months. If there were a reliable way to know in real time which kind you were in, that would be worth more than almost anything else in investing. Nobody has reliably had that in any of these four cases. What every one of them rewarded instead was the boring stuff, not being leveraged past what you could survive, having a plan for how much you were willing to lose before you needed to act on it, and not needing to guess correctly about the recovery shape to avoid being wiped out waiting for it.

Read the complete narrative.

This narrative for Nasdaq leans on steady revenue expansion, rising profit margins and a future earnings multiple that assumes those trends can be sustained. It is useful to understand which specific growth path and profitability profile are being modeled to support that fair value and how the required return rate is being applied in the analysis.

Result: Fair Value of $104.19 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this Nasdaq narrative could be challenged if fraud prevention demand slows unexpectedly or if trading activity weakens and pressures the current earnings assumptions.

Find out about the key risks to this Nasdaq narrative.

Another View On Nasdaq’s Valuation

While the leading Nasdaq narrative points to a fair value of $104.19 and an undervalued stock, the current P/E of 27.5x tells a more cautious story. It is below the US Capital Markets industry average of 39.7x, yet above the peer average of 26.7x and well above a fair ratio of 16.5x. That gap suggests investors should think carefully about how much optimism is already in the price.

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If this mix of cautious and optimistic signals around Nasdaq leaves you unsure, move quickly to review the details and shape your own view with 3 key rewards and 2 important warning signs

Looking For More Investment Ideas Beyond Nasdaq?

Nasdaq might be on your radar, but you do not want to stop there. Broaden your watchlist now so you are not late to the next opportunity.

• Target resilient balance sheets and consistent fundamentals with our list of solid balance sheet and fundamentals (52 results). This can help you focus on businesses built to handle tougher conditions.
• Zero in on potential value opportunities by scanning our 47 high quality undervalued stocks. Compare companies that pair quality metrics with prices that may lag their fundamentals.
• Prioritise stability and defence by reviewing the 82 resilient stocks with low risk scores so you can concentrate capital in companies with lower risk scores.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com