Last update on 2024-06-06

Nasdaq (NDAQ) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Analyze Nasdaq (NDAQ) using the Piotroski F-Score for 2023. Find out if it's a strong, undervalued investment based on financial health and operational efficiency.

Short Analysis - Piotroski Score: 5

We're running Nasdaq (NDAQ) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score helps investors gauge the financial strength and potential of a company using a range of criteria. Nasdaq (NDAQ) has a Piotroski F-Score of 5 out of 9, indicating a mixed performance. Here are key points based on profitability, liquidity, and operating capacity: Nasdaq shows consistent profitability with a net income of $1,059 million and strong cash flow from operations at $1,696 million for 2023. However, ROA has decreased, signifying some inefficiencies in asset performance. The company has a high operating cash flow compared to its net income, indicating robust cash flow management. Liquidity metrics reveal a mixed picture: while the current ratio increased slightly, indicating better short-term financial health, leverage has also increased, signaling higher debt levels. The number of shares has increased, which means potential dilution for existing shareholders. Positively, Nasdaq’s gross margin has improved, but its asset turnover ratio has declined, implying reduced efficiency in using assets to generate revenue.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 5, Nasdaq (NDAQ) demonstrates some strong financial health indicators, such as profitability and cash flow management, but also shows areas of concern like increasing leverage and declining asset efficiency. It would be wise for potential investors to closely monitor these risks and not just the positive signals. Therefore, further scrutiny and continuous tracking of these financial metrics are essential before making an investment decision in Nasdaq.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Nasdaq (NDAQ)

Company has a positive net income?

The criterion examines whether the net income is positive, indicating profitability. This signals financial health and effective operational management.

For Nasdaq (NDAQ) in 2023, the net income is reported as $1,059,000,000. A positive net income signifies robust financial performance and effective cost management. Historically, Nasdaq has shown consistent profitability with a few exceptions, as seen in the net income values over the last 20 years. Notably, the company turned profitable in 2004 and has largely sustained this trend barring the initial loss reported in 2003. The trend, especially the upward trajectory from 2016 to 2021, underscores a period of financial growth and consolidation. Considering the net income is positive in the current year, it demonstrates continued operational success. Hence, this criterion scores a solid 1 point.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates how much cash a company generates from its regular business operations.

In 2023, Nasdaq has reported a positive Cash Flow from Operations (CFO) amounting to $1,696,000,000. This positive cash flow is a good indicator as it shows that the company is generative substantial cash from its core business activities, which could be used for reinvestment, paying dividends, or settling debt. Monitoring the historical CFO, Nasdaq has consistently displayed an upward trend over the past 20 years, with particularly significant increases observed in the last five years. For instance, the operating cash flow jumped from $963,000,000 in 2018 to the current $1,696,000,000 in 2023. This improved CFO performance earns Nasdaq 1 point according to the Piotroski F-Score system, signifying financial robustness.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company's profitability in relation to its total assets. An increasing ROA indicates better financial health.

With the current ROA at 0.0398 in 2023 compared to 0.0549 in 2022, there has been a decrease rather than an increase in ROA, resulting in a score of 0 points for this criterion. This lowers Nasdaq's appeal as a purely numbers-driven investment. A declining ROA can signal inefficiencies or deteriorating asset performance. Historically, if we compare these values to the industry median ROA, which hovered around 0.6845 to 0.6043 over the last two decades, Nasdaq’s ROA significantly underperforms the broader industry, further emphasizing concerns regarding Nasdaq’s return efficiency on its assets.

Operating Cashflow are higher than Netincome?

Operating cash flow being higher than net income indicates that the company is generating more cash from its operations compared to its accounting profits, signifying strong cash flow management and a cushion against accrual-based earnings manipulations.

For 2023, Nasdaq's operating cash flow is $1.696 billion, which is indeed higher than its net income of $1.059 billion, adding 1 point according to the Piotroski score criteria. This suggests a robust cash-generating capability, which is a positive sign. Over the past 20 years, Nasdaq's operating cash flow has generally shown a consistent upward trend, reaching $1.696 billion in 2023 from $105.267 million in 2003. The increasing trend of operating cash flow, paired with the fact that in 2023 it surpasses net income, suggests efficient operational management and strong liquidity positioning. Despite fluctuations in net income over the years, with 2023's net income being lower than in previous years, the strong operating cash flow mitigates concerns and reflects good financial health.

Liquidity of Nasdaq (NDAQ)

Leverage is declining?

Change in Leverage assesses the year-over-year alteration in a company's leverage ratio, which reflects its use of debt financing. A decrease in leverage implies improved financial health.

The leverage for Nasdaq (NDAQ) increased from 0.2486 in 2022 to 0.3276 in 2023, indicating a rise in debt financing relative to its equity. This uptick translates to adding more risk, as higher leverage often suggests increased debt burden. Historical data reveals fluctuating leverage levels with peaks in 2005 and significant reductions thereafter. Given this scenario, the result for the Piotroski criterion is 0, signaling a negative trend in leverage for 2023.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay off its short-term liabilities with its short-term assets. It's a crucial indicator of liquidity and financial health. An increasing Current Ratio suggests improved liquidity and risk mitigation.

The Current Ratio for Nasdaq (NDAQ) has increased from 0.9739 in 2022 to 1.0079 in 2023, reflecting an augmentation in the firm's liquidity position. Historically, NDAQ's Current Ratio has seen significant fluctuations over the last two decades. For instance, it peaked at 5.0214 in 2006 and hit a low of 0.943 in 2021. Compared to the industry median, which recorded 1.0552 in 2022 and a decrement to 1.0148 in 2023, NDAQ's ratio shows a relatively slight but positive increase. This increase brings NDAQ's current ratio closer in line with the industry standard and signifies better preparedness in meeting short-term obligations. Therefore, for the Piotroski Analyses, NDAQ receives 1 point for improved Current Ratio in 2023.

Number of shares not diluted?

the criterion for Nasdaq (NDAQ) and why it is important to consider the change in shares outstanding.

In 2023, Nasdaq (NDAQ) has 504,909,392 outstanding shares compared to 492,420,787 in 2022, reflecting an increase. This growing trend, visible from last 20 years' dataset, signifies possible dilution, setting a 0 score.

Operating of Nasdaq (NDAQ)

Cross Margin is growing?

Gross Margin is a company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, presented as a percentage. It represents how efficiently a company is producing and selling its goods.

The Gross Margin for Nasdaq (NDAQ) has improved in 2023, increasing to 0.4199 from 0.3757 in 2022. This signifies a positive trend, indicating that Nasdaq has been able to manage its production and sales more efficiently over the last year. Over the past 20 years, Nasdaq's Gross Margin displayed volatility, with the lowest at 0.1982 in 2003 and the highest at 0.8967 in 2004. The 2023 Gross Margin stands above the industry's 2023 median of 0.6043, showcasing Nasdaq’s competitive efficiency. Comparatively, while Nasdaq had lower margins versus the industry median in earlier years, recent performance indicates a stronger hold, with the current margin improvements garnering a notable 1-point in the Piotroski scoring system.

Asset Turnover Ratio is growing?

Asset Turnover measures a company’s efficiency in using its assets to generate sales. A higher ratio implies effective use of assets.

In the case of Nasdaq (NDAQ), the Asset Turnover ratio has decreased from 0.3038 in 2022 to 0.2281 in 2023. This represents a decrease and indicates that Nasdaq's efficiency in using its assets to generate revenue has declined. Reviewing data over 20 years shows that this ratio peaked at 0.7278 in 2007 and reached a low of 0.2269 in 2011 before stabilizing around the 0.3 mark in recent years. The 2023 figure is now at its lowest level since 2003. This suggests a deterioration in asset utilization, so we score this criterion as 0. It is notable as consistent efficiency is crucial for sustained growth.