Case Study: Using Nasdaq Ndaq Financials to Uncover Investment Opportunities
Nasdaq Inc (NDAQ) is the company that operates the Nasdaq stock exchange, alongside a growing portfolio of financial technology, market data, and anti-financial crime software businesses. Analyzing Nasdaq ndaq financials through a value investing lens reveals a business that has been steadily transforming from a pure transaction-volume-dependent exchange into a software and analytics platform. The transformation has implications for valuation multiples, revenue quality, and the risk profile of holding NDAQ as a long-term investment.
This case study walks through NDAQ's financial statements, the key metrics that matter, and the specific valuation work that determines whether the stock offers an opportunity at current prices.
Key Takeaways
- Nasdaq Inc generates revenue across three segments: Capital Access Platforms (listings, workflows, analytics), Financial Technology (anti-financial crime software, market infrastructure), and Market Services (trading, clearing).
- The company's transition toward subscription-based SaaS revenue is raising the quality of earnings. Recurring revenues now represent over 75% of net revenue, up from roughly 40% in 2015.
- NDAQ's acquisition of Adenza in 2023 for $10.5 billion added significant debt, raising net debt to roughly $11 billion and pushing the debt-to-EBITDA ratio above 4x at close.
- The earnings yield on NDAQ sits near 3.5-4.0% based on trailing operating earnings, which is below the S&P 500's average earnings yield but reflects the higher recurring revenue quality.
- Price-to-book for NDAQ is not the primary valuation lens given that exchange and software businesses carry substantial intangible assets. EV/EBITDA and earnings yield provide more useful anchors.
- Graham Number analysis on NDAQ requires an adjustment for goodwill and acquired intangibles, which total over $14 billion after Adenza.
Background: What Nasdaq Inc Actually Is
Nasdaq the exchange and Nasdaq the company are different things. The Nasdaq stock exchange is the trading venue where over 3,000 companies list their shares. Nasdaq Inc (ticker: NDAQ) is the publicly traded company that owns and operates that exchange, along with a now-substantial software business.
The NDAQ business mix as of fiscal year 2024:
| Segment | 2024 Revenue | Revenue Mix | Growth (YoY) |
|---|---|---|---|
| Capital Access Platforms | $1.87B | 36% | +4% |
| Financial Technology | $1.79B | 34% | +19% |
| Market Services | $1.60B | 30% | +8% |
| Total Net Revenue | $5.26B | 100% | +9% |
The Financial Technology segment includes Verafin (anti-financial crime analytics), Calypso (capital markets software), and the recently integrated Adenza businesses. This segment is growing fastest and carries the highest recurring revenue percentage, above 90%. Its growth is also the primary reason management has justified paying a significant premium for acquisitions.
The Income Statement: Revenue Quality and Margin Trends
NDAQ's income statement tells the story of a business that has been spending heavily to build recurring software revenue at the cost of near-term margins.
For 2024, NDAQ reported net revenue of $5.26 billion and operating income of approximately $1.95 billion, implying an operating margin of 37%. That margin is below the 40-45% range the company achieved before Adenza, reflecting integration costs and the higher cost structure of the acquired businesses.
Non-GAAP earnings, which strip out acquired intangible amortization and restructuring charges, run meaningfully above GAAP earnings. In 2024, GAAP diluted EPS was approximately $2.45 while non-GAAP diluted EPS was approximately $3.15. The gap matters because a large portion of the difference is amortization of acquired intangibles, which is a real economic cost if those intangibles need to be replaced over time. For NDAQ's technology businesses, the intangibles are primarily customer relationships and developed technology, both of which do require ongoing reinvestment to maintain.
The Balance Sheet: The Adenza Debt Load
The 2023 Adenza acquisition at $10.5 billion (paid partly in stock, partly in debt) materially changed NDAQ's balance sheet. Before the deal, NDAQ carried roughly $4 billion in long-term debt and a debt-to-EBITDA ratio near 2.8x. After Adenza, net debt rose above $11 billion and the debt ratio peaked above 4x.
As of end of 2024, NDAQ had reduced net debt to approximately $9.4 billion, ahead of its original deleveraging schedule. Management targeted a debt-to-EBITDA ratio of 3x by end of 2025. The progress matters because it reduces the probability of needing a dilutive equity raise and signals that the acquired businesses are generating cash as expected.
Goodwill and acquired intangibles on the balance sheet total over $14 billion, representing more than 60% of total assets. This is common in acquisitive software companies but means that traditional price-to-book analysis is largely meaningless without stripping out the intangibles. On a tangible book value basis, NDAQ carries negative equity, which is a feature, not a bug, of this business model.
Cash Flow Analysis: Where the Quality Shows
The cash flow statement is where NDAQ's earnings quality becomes clear. Operating cash flow for 2024 was approximately $2.1 billion, compared to GAAP net income of roughly $950 million. The large gap reflects non-cash amortization charges that depress GAAP income but not cash.
Free cash flow (operating cash flow minus capex) was approximately $1.8 billion in 2024. This number is the most relevant for intrinsic value purposes. NDAQ used its free cash flow to pay dividends of approximately $500 million, repurchase shares when prices allowed, and service debt.
The free cash flow yield on NDAQ at current market prices (approximately $65-68 per share, market cap near $39 billion as of early 2026) is roughly 4.6% on a forward basis. That is above the risk-free rate of approximately 4.2% on 10-year Treasuries, which means investors are not paying much premium for the business's growth prospects if they value it on a yield basis alone.
Valuation: EV/EBITDA and Earnings Yield
For exchange and financial technology companies like NDAQ, EV/EBITDA is more informative than P/E because it accounts for the significant debt load and removes the distortion of acquired intangible amortization.
| Metric | NDAQ (2024) | CME Group | Intercontinental Exchange | S&P Global |
|---|---|---|---|---|
| EV/EBITDA | 17.8x | 20.2x | 18.4x | 21.5x |
| P/E (GAAP) | 28.1x | 23.6x | 25.4x | 32.7x |
| P/E (Non-GAAP) | 20.6x | 21.8x | 21.2x | 27.1x |
| FCF Yield | 4.6% | 4.1% | 4.3% | 3.8% |
| Revenue Growth (3yr ann.) | 11.2% | 6.4% | 8.7% | 9.3% |
| Net Debt / EBITDA | 3.9x | 0.8x | 3.2x | 1.6x |
NDAQ trades at a slight discount to CME and S&P Global on EV/EBITDA despite faster revenue growth. The discount is explained by the higher debt load. As the company reduces debt through 2025-2026, the valuation discount should compress if earnings growth continues at the current pace.
The earnings yield on NDAQ using non-GAAP EPS of $3.15 and a share price near $67 is approximately 4.7%. That is above the 10-year Treasury yield, which suggests the market is pricing in modest real growth in earnings. A DCF intrinsic value calculation with 8% earnings growth for five years, declining to 4% terminal growth, and a 9% discount rate, produces an intrinsic value near $75-80 per share.
The Graham Number Approach and Its Limits
A traditional Graham Number calculation for NDAQ using GAAP EPS of $2.45 and book value per share of approximately $37 (after excluding goodwill and intangibles, tangible book is near negative $30 per share) produces a number that is not useful in isolation. The Graham Number formula, square root of (22.5 x EPS x BVPS), does not apply to companies where intangible assets dominate the balance sheet.
The more appropriate Benjamin Graham framework for a business like NDAQ is the earnings power value approach: capitalize normalized earnings at a rate reflecting the business's risk and growth characteristics. Using normalized non-GAAP earnings of $3.00-3.20 and a multiple of 18-20x (reflecting exchange-like stability and software-like growth), the earnings power value sits near $54-64. The current price sits above this range, which tells value investors that the market is paying for growth beyond the current earnings run rate.
This is not unusual for high-quality market infrastructure businesses. The question is whether the Financial Technology segment can sustain 15-20% growth for the next three to five years to justify the premium.
What the NDAQ Case Study Teaches Investors
The NDAQ analysis illustrates three principles that apply broadly to any mature business undergoing a transformation.
First, revenue mix matters more than total revenue growth. NDAQ's shift from trading-volume-dependent revenue to recurring software subscriptions has reduced earnings volatility and justified multiple expansion over the past decade.
Second, acquisition-driven growth requires scrutiny of cash flow, not just income. GAAP earnings understate cash generation at NDAQ due to amortization. Investors who only read the income statement will miss the cash flow quality.
Third, elevated debt is temporary until it is not. NDAQ's debt reduction progress is on track, but any setback in the Financial Technology segment's revenue growth would slow the pace and extend the period of elevated debt risk.
Run NDAQ and its exchange and fintech peers through our screener to compare earnings yield, return on equity, and revenue quality across the financial infrastructure sector.
Further reading: SEC EDGAR · Investopedia
Why NDAQ stock analysis Matters
This section anchors the discussion on NDAQ stock analysis. The detailed treatment, formula, and worked examples appear in the body of this article above. The points below summarize the most important takeaways for value investors who want to apply NDAQ stock analysis in real portfolio decisions. ValueMarkers exposes the underlying data on every covered ticker via the screener and stock profile pages, so the concepts in this article translate directly into actionable filters.
Key inputs for NDAQ stock analysis
See the main discussion of NDAQ stock analysis in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using NDAQ stock analysis alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.
Sector benchmarks for NDAQ stock analysis
See the main discussion of NDAQ stock analysis in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using NDAQ stock analysis alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.
Related ValueMarkers Resources
- Earnings Yield — Earnings Yield is the metric used to how cheaply a stock trades relative to its fundamentals
- Graham Number — Graham Number captures how cheaply a stock trades relative to its fundamentals
- Pb Ratio — Glossary entry for Pb Ratio
- Dow Jones — related ValueMarkers analysis
- Sandp 500 — related ValueMarkers analysis
- Investment Portfolio Analysis Basics — related ValueMarkers analysis
Frequently Asked Questions
when is nasdaq futures contract rollover
Nasdaq 100 futures (NQ) contracts roll quarterly: in March, June, September, and December. The rollover date is typically the Thursday before the third Friday of the expiration month. During rollover week, the new front-month contract becomes the most actively traded, and investors should switch their pricing references from the expiring contract to the new one to avoid distorted data in screens and charting tools.
why did nasdaq go down today
The Nasdaq Composite and Nasdaq 100 index fall when technology and growth stocks face selling pressure, which typically accompanies rising interest rate expectations, weak earnings from large-cap tech companies, or broad risk-off sentiment. Because the Nasdaq indices are market-cap weighted and concentrated in Apple (AAPL at P/E 28.3), Microsoft (MSFT at P/E 32.1), and Nvidia, a sharp decline in any of these three stocks can pull the index down 1-2% without broad market participation.
how to trade the nasdaq index
Individual investors can gain exposure to the Nasdaq 100 through QQQ (the Invesco ETF tracking the Nasdaq 100), through E-mini Nasdaq 100 futures (ticker: NQ) traded on the CME, or through micro E-mini futures (MNQ) for smaller position sizes. For long-term investors, QQQ provides low-cost diversified exposure. For shorter-term directional bets or hedging, the futures offer magnified exposure. Active traders also use options on QQQ or on individual Nasdaq constituents.
why is nasdaq down
The Nasdaq typically underperforms the broader S&P 500 in periods of rising real interest rates because growth stocks are valued on future earnings, which are discounted more heavily when rates rise. In 2022, when the 10-year Treasury yield rose from 1.5% to 4.2%, the Nasdaq 100 fell 32.6% while the S&P 500 fell 18.1%. The interest rate sensitivity is structural and predictable. Investors holding heavy Nasdaq exposure should monitor real yield levels on the 10-year TIPS bond as the most direct leading indicator of Nasdaq relative performance.
what is the nasdaq today
The Nasdaq refers to three distinct things depending on context: the Nasdaq Composite index (all ~3,000 Nasdaq-listed stocks), the Nasdaq 100 index (the 100 largest non-financial Nasdaq stocks), or the Nasdaq stock exchange itself. In casual usage, people typically mean the Composite, which trades under the ticker symbol COMP or ^IXIC. As of early 2026, the Composite sits near 19,200, having recovered from the October 2022 low of approximately 10,200.
how is the nasdaq doing today
The Nasdaq's intraday performance is visible on any brokerage platform or financial data site under ^IXIC (Composite) or ^NDX (Nasdaq 100). For NDAQ the stock, check the NDAQ ticker on NYSE. Performance context matters more than the raw number: a 0.5% Nasdaq decline on a day when the S&P 500 is flat signals sector-specific selling in tech, while a 0.5% decline matching the S&P 500 reflects broad market movement rather than a tech-specific signal.
Use our screener to analyze NDAQ and comparable exchange and fintech stocks side by side on earnings yield, free cash flow yield, and return on equity to determine where NDAQ sits in its own historical valuation range and relative to peers.
Written by Javier Sanz, Founder of ValueMarkers. Last updated April 2026.
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Disclaimer: This content is for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.