Intrinsic Value Nasdaq, Inc. (0K4T.L)

• Previous Close: £96.35
• Intrinsic Value: £32.93
• Upside potential: -66%

Stock Valuation Context

Business Model And Market Position

Nasdaq, Inc. is a global technology leader serving capital markets and adjacent industries through diversified segments. Its Market Technology division provides SaaS-based anti-financial crime solutions, including Nasdaq Trade Surveillance and Verafin, catering to compliance needs for brokers and financial institutions. The Investment Intelligence segment delivers market data, proprietary indexes, and analytics, while Corporate Platforms manages listing services and governance solutions. Nasdaq operates multiple exchanges, facilitating trading across equities, derivatives, fixed income, and digital assets, reinforcing its role as a critical infrastructure provider in global finance. With over 4,100 listed companies, Nasdaq maintains a dominant position in equity listings, particularly for growth-oriented firms. Its multi-asset trading and clearing capabilities, combined with data and technology offerings, create a resilient, recurring revenue model. The company’s shift toward SaaS and cloud-based solutions enhances scalability and margins, positioning it at the intersection of financial services and fintech innovation.

Revenue Profitability And Efficiency

Nasdaq reported $7.4 billion in revenue for the latest fiscal year, with net income of $1.1 billion, reflecting a 15.1% net margin. Diluted EPS stood at $1.93, supported by $1.9 billion in operating cash flow. Capital expenditures of $207 million indicate disciplined reinvestment, with strong free cash flow conversion. The company’s diversified revenue streams, including recurring SaaS and data fees, contribute to stable profitability.

Earnings Power And Capital Efficiency

Nasdaq’s earnings are underpinned by high-margin technology and data services, which complement its exchange operations. The firm’s capital efficiency is evident in its ability to generate substantial operating cash flow relative to net income. Debt levels are manageable at $9.9 billion, with ample liquidity ($623 million in cash) to support growth initiatives and shareholder returns.

Balance Sheet And Financial Health

Nasdaq’s balance sheet shows $623 million in cash against $9.9 billion in total debt, reflecting a leveraged but sustainable structure. The company’s cash flow generation supports debt servicing and strategic investments. Its equity base remains robust, with 575.4 million shares outstanding, and the dividend payout appears conservative relative to earnings and cash flow.

Growth Trends And Dividend Policy

Nasdaq has demonstrated consistent growth through organic initiatives and acquisitions, particularly in SaaS and anti-financial crime technology. The dividend per share of $0.96 suggests a commitment to returning capital, with room for increases given earnings retention. Future growth may hinge on expanding its technology offerings and leveraging regulatory tailwinds in surveillance and compliance.

Valuation And Market Expectations

With a market cap of $47.1 billion and a beta of 1.008, Nasdaq trades in line with broader market volatility. Investors likely price in steady growth from its technology segments and stable cash flows from exchange operations. The valuation reflects its hybrid role as a financial infrastructure provider and tech-enabled solutions leader.

Strategic Advantages And Outlook

Nasdaq’s dual focus on market infrastructure and fintech innovation provides competitive moats. Its SaaS transition and global regulatory expertise position it well for long-term growth. Risks include exchange volume sensitivity and tech disruption, but its diversified model and recurring revenue streams mitigate cyclicality. The outlook remains positive, driven by demand for compliance tools and data analytics.

Sources

Company filings, Bloomberg